A Whole life Insurance policy accumulates cash value that becomes

• A. surrender value
• B. policy loan value
• C. dividends payable
• D. cash value

Answer: (B)

In a whole life policy, the cash value that builds up over time is the amount you can access for borrowing. The term for that accessible portion is the policy loan value. This is the cash value you can borrow against; the money remains a loan against the policy and will reduce the death benefit by the loan amount until it’s repaid.

This differs from surrender value, which is what you’d receive if you surrendered the policy today (cash value minus any surrender charges and minus any outstanding loans). Dividends payable are separate distributions for participating policies and aren’t the amount you borrow against. If you borrow against the cash value, interest accrues and the death benefit is reduced by the outstanding loan.