What are the requirements to maintain a life insurance policy's cash value?

To maintain a life insurance policy's cash value, it is essential that premium payments are made consistently and that the policy remains in force. The cash value component of a permanent life insurance policy, such as whole or universal life, builds over time as part of the premiums paid by the policyholder. If premium payments are not maintained, the policy may lapse, resulting in the loss of cash value accumulated to that point.

The policy must remain active and in good standing to ensure that the cash value continues to grow and can be accessed by the policyholder as loans or withdrawals. This requirement highlights the importance of continuous contributions and keeping the policy effective, which differentiates it from other types of policy ownership, such as term life insurance, that do not build cash value and do not need to be maintained in the same way.