Cash Value


The term “Cash Value” means the greater of (i) the amount that the policyholder is entitled to receive upon surrender or termination of the contract (determined without reduction for any surrender charge or policy loan), and (ii) the amount the policyholder can borrow under or with regard to the contract.Notwithstanding the foregoing, the term “Cash Value” does not include an amount payable under an Insurance Contract:

a) solely by reason of the death of an individual insured under a life insurance contract;

b) as a personal injury or sickness benefit or other benefit providing indemnification of an economic loss incurred upon the occurrence of the event insured against;

c) as a refund of a previously paid premium (less cost of insurance charges whether or not actually imposed) under an Insurance Contract (other than an investment-linked life insurance or annuity contract) due to cancellation or termination of the contract, decrease in risk exposure during the effective period of the contract, or arising from the correction of a posting or similar error with regard to the premium for the contract;

d) as a policyholder dividend (other than a termination dividend) provided that the dividend relates to an InsuranceContract under which the only benefits payable are described in subparagraph C(8)(b); or

e) as a return of an advance premium or premium deposit for anInsurance Contract for which the premium is payable at least annually if the amount of the advance premium or premium deposit does not exceed the next annual premium that will be payable under the contract.


The term cash value has the meaning set forth in §1.1471-5(b)(3)(vii)(B). Cash value [§1.1471-5(b)(3)(vii)(B)]

Except as otherwise provided in paragraph (b)(3)(vii)(C) of this section, the term cash value means any amount (determined without reduction for any charge or policy loan) that-

(1) Is payable under the contract to any person upon surrender, termination, cancellation, or withdrawal; or [§1.1471-5(b)(3)(vii)(B)(1)]

(2) Any person can borrow under or with regard to (for example, by pledging as collateral) the contract. [§1.1471-5(b)(3)(vii)(B)(2)]

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