What is a key feature of cash value in insurance policies?

A key feature of cash value in insurance policies is that it represents a savings component within the policy. Unlike term life insurance, which only provides a death benefit, whole life and certain other types of permanent insurance build cash value over time, which can be accessed by the policyholder. This cash value accumulates on a tax-deferred basis and can serve various purposes, such as borrowing against it or using it to pay premiums.

The cash value grows based on premium payments and the insurer's investment performance, offering a financial asset that policyholders can leverage not just for coverage but also as part of their overall financial strategy.