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: April 21, 2023 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. Learn more about cash value life insurance here. What happens to the cash value in my whole life policy after I die? When you die, any remaining cash value in your life insurance policy goes back to the life insurance company. If you haven’t utilized the funds put into the cash value, you’ve wasted years of premiums. On the other hand, if you did use the cash value of your policy, it could have repercussions on how much money your beneficiaries receive. For example, if you took out a loan against your policy’s cash value and did not pay it back, the insurance company will deduct it from the death benefit — with interest. 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 an important financial planning tool for people with high incomes, but they don’t provide funds for 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 find a lost life insurance 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? How to read your life insurance policy Life insurance riders: What they are and how they work Who's who on a life insurance policy Guide to life insurance for transgender applicants Understanding your life insurance policy options What is a life insurance beneficiary? 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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. × 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 change the coverage of your term life insurance? By Insure .com Can you cash in a paid up life insurance policy? By Les Masterson 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 Do life insurance policies pay out if you die of old age? By Desiree Ghazi On this page How does the cash value work?What happens to the cash value in my whole life policy after I die?When do beneficiaries get the cash value and the death benefit?Does the cash value impact the death benefit? ZIP Code Please enter valid ZIP See rates