Home Life insurance Life insurance questions What happens to the cash value of my whole life insurance policy when I die? What happens to the cash value of my whole life insurance policy when I die? When you die, the life insurance company keeps the cash value and only pays out the death benefit to your beneficiaries. Written by Nupur Gambhir Nupur Gambhir Nupur Gambhir is a content editor and licensed life, health, and disability insurance expert. She has extensive experience bringing brands to life and has built award-nominated campaigns for travel and tech. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service. | Reviewed by Laura Longero Laura Longero Laura Longero is a content strategist and communications leader with more than 15 years of experience in content development in journalism, marketing and communications for start-ups to global companies. She started her career as a reporter and editor and honed her journalistic skills at the USA Today Network, working in several roles, as well as managing content and writing at MoneyGeek and XYZ Media. | Updated on: October 17, 2024 Why you can trust Insure.com Quality Verified At Insure.com, we are committed to providing the timely, accurate and expert information consumers need to make smart insurance decisions. All our content is written and reviewed by industry professionals and insurance experts. Our team carefully vets our rate data to ensure we only provide reliable and up-to-date insurance pricing. We follow the highest editorial standards. Our content is based solely on objective research and data gathering. We maintain strict editorial independence to ensure unbiased coverage of the insurance industry. If you have cash value life insurance and die, the life insurance company will absorb the cash value and your beneficiaries will be paid the policy’s death benefit. Your beneficiaries will not get any of the cash value, because the policyholder can only use the cash value of a life insurance policy while they are alive. The cash value is not paid out to beneficiaries. However, some life insurance policies allow you to increase the death benefit as you grow the cash value. Cash value life insurance can be complicated, and it is important to consult a financial advisor before incorporating it into your financial plan. Key TakeawaysInsurers will absorb the cash value of your whole life insurance policy after you die, and your beneficiaries will receive the death benefit.The policyholder can only use the cash value while they are alive.If you have a paid-up insurance rider, you may be able to grow your policy’s death benefit as you grow the cash value. How does the cash value work? While you’re alive, you can borrow against the cash value or withdraw money. You can also use the cash value to pay your premiums. However, you have to wait until the cash account has accumulated enough value and is paid up, which takes decades. All of this comes at a cost — if you borrow from cash value, you have to pay interest if you repay the loan. If you decide not to repay the loan and take the money as a withdrawal, the amount, plus interest, will be deducted from the death benefit. In some cases, more than the withdrawal amount plus interest is deducted, which could wipe out the death benefit. Any outstanding loans at the time you die will reduce the death benefit for your beneficiaries. Also, any non-loan withdrawals will get taxed at your ordinary-income tax rate. What happens to my policy’s cash value after I die? When you die, any remaining cash value in your life insurance policy goes back to the life insurance company, even if you haven’t utilized the funds put into the cash value. However, if you’ve accessed the cash value of your policy, it can affect the amount your beneficiaries receive. For instance, if you took out a loan against the cash value and didn’t repay it, the insurance company will deduct the loan amount, plus interest, from the death benefit. Before you sign up for a cash value life insurance policy, you should consult a financial advisor about the implications of such a policy on your financial and estate plans. When do beneficiaries get the cash value and the death benefit? Usually, the cash value can only be used while you, the policyholder, are alive. The cash value remains completely separate from the death benefit, and cannot be accessed by your beneficiaries, even when you die. There is one scenario where beneficiaries can access your policy’s cash value: if you purchased paid-up additional insurance. Paid-up additional insurance is a rider that allows for the death benefit to increase alongside the cash value. This rider is not widely available, so you’ll need to check with your insurer if you have access to this option. Cash value policies can be a valuable financial planning tool for high-income individuals, but the cash value itself is not passed on to your beneficiaries after you die. If you bought life insurance to provide funds for your family, you’ll want to carefully lay out your financial plan and ensure that your policy’s cash value doesn’t diminish the death benefit. QuickTake How to get life insurance if you're uninsurable Who's who on a life insurance policy The life insurance contestability period: What you need to know Is accidental death and dismemberment insurance right for you? How to find a lost life insurance policy Comprehensive guide to life insurance: What it is and how it works How to make sure you have enough life insurance What is cash value life insurance and how does it work? 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How to convert a term life policy to permanent life insurance Life insurance tax surprise: The unholy trinity How life insurance rates are determined How to do a needs analysis before you buy life insurance Sports that could knock you out of contention for life insurance Variable life and variable annuity sub-accounts: The more the merrier? See more > Does the cash value impact the death benefit? After the insured dies, a whole life insurance policy usually pays out just as any other life insurance policy does. The beneficiaries file a claim and receive the death benefit to use however they wish. But if you borrowed against the cash value and never paid it back, that amount will be deducted from the final death benefit amount. Additionally, if you withdrew from the cash value, that amount will also be deducted from the death benefit paid out. But, if you leave the cash value as is, your policy’s death benefit will remain stable and your beneficiaries will receive the entire lump sum. How can you use the cash value while you’re alive? One of the most common ways to use your cash value while is by taking out a loan against the cash value. This allows you to borrow money at relatively low interest rates, using the policy as collateral, without the need to go through traditional lenders. You can use these funds for a variety of needs, such as covering emergency expenses, paying off debt, or even supplementing your retirement income. Any unpaid amount from the loan, including interest, will be deducted from the death benefit when you pass away. Another option is to make direct withdrawals from the cash value. This can provide you with immediate access to funds, but it’s important to note that withdrawing money can reduce the death benefit. Additionally, you may also have the option to surrender your policy altogether to receive the full cash value, though this will cancel the policy and leave your beneficiaries without a death benefit. Many people also choose to use the accumulated cash value to cover future premium payments, reducing their out-of-pocket costs for maintaining the policy. However, before tapping into your policy’s cash value, it’s important to understand how these actions will impact your long-term coverage and benefits. × Get Free Life Insurance Quotes Today! Zip Code Please enter valid zip Age Age 16 – 20 21 – 24 25 – 34 35 – 44 45 – 54 55 – 64 65+ Coverage Amount Coverage Amount $50,000 – $100,000 $100,000 – $200,000 $200,000 – $300,000 $400,000 – $500,000 $500,000 – $1,000,000 $1,000,000 – $2,000,000 $2,000,000 – $5,000,000 $5,000,000+ Coverage Type Coverage Type Whole Life Term Life Final Expense Not Sure Gender Gender Male Female Non-Binary Tobacco Use Yes No Compare Quotes Nupur GambhirManaging Editor | . .Nupur Gambhir is a content editor and licensed life, health, and disability insurance expert. She has extensive experience bringing brands to life and has built award-nominated campaigns for travel and tech. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service. Related Articles Can you cash in a paid up life insurance policy? By Les Masterson Can someone take out a secret life insurance policy on you? By Desiree Ghazi Can you change the coverage of your term life insurance? By Insure .com Can you cash in a life insurance policy to pay off debt? By Barbara Marquand Can I withdraw money from my life insurance policy? By Desiree Ghazi How can I get life insurance if I’m in poor health? By Desiree Ghazi On this page How does the cash value work?What happens to my policy's cash value after I die?When do beneficiaries get the cash value and the death benefit?Does the cash value impact the death benefit?How can you use the cash value while you're alive? 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