text: what is the term "cash value" mean on a whole life insurance policy?   a whole life insurance policy is actually two pieces in one. one piece buys just the life insurance. but the other piece is an investment much like any other cash investment you make. this "other piece" is the cash value of the policy. over the years the cash value will build up and can become substantial. sometimes it builds up so much that it can be used to pay the premiums on the policy.  the other kind of life insurance called 'term' insurance is just the first part of the policy....the pure life part.  you can probably guess which one is more expensive.  whole life costs a lot more than term life and some people prefer to just buy term and save the cash to invest themselves.  the key is how diligent you would be in actually following through on investing the savings.  if you don't want to bother with the investing part of it, buy whole life. if you want more options and control then buy term and use what you would have paid above that as investment.