Just 15.2% of U.S. Families Still Have Cash Value Life Insurance, With a Typical Policy at $12,000

Quick Read

• Cash value life insurance ownership slipped to 15% of families in 2025 from 16% in 2022, while the median policy value climbed 13% to $12,000.

• Retirees with older policies can keep them, borrow against them, surrender them, or exchange them, but each choice can trigger different tax outcomes, including taxable gains on surrender and the risk of a policy lapsing if there is a loan outstanding.

• Before making a move, policyholders should ask the insurer for an in-force illustration to review projected results under guaranteed and current rates.

Many households still have a whole life policy that a parent purchased years ago and no one has looked at in a long time. A paper statement tucked away in a drawer may show cash value that has gone untouched for years. The Federal Reserve's latest Survey of Consumer Finances suggests these policies are becoming less common. Only 15.2% of families owned cash value life insurance in 2025, down from 16.1% in 2022.

For those who still hold a policy, the typical amount inside it increased. The median cash value among owners rose from $10,600 to $12,000, a gain of 13%, using 2025 dollars. That is not a huge sum, but it is still meaningful money, and retirees should understand the options before deciding what to do with it.

How Cash Value Coverage Is Different From Term Insurance

Term life insurance is straightforward. The policyholder pays for protection over a fixed period, and if the insured dies during that period, the family receives the benefit. Once the term expires, the coverage ends and nothing remains.

Cash value policies, such as whole life, are designed to last for life. Part of each premium covers the insurance itself, while another part builds a savings element inside the policy known as cash value. That balance can grow over time, and the owner may borrow against it or withdraw from it. Those added features are a big reason these policies cost more than term coverage.

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Why the Median Tells a Better Story Than the Average

The Fed also reports the mean, or simple average, cash value. In 2025, that figure reached $61,700, up just 2%. It is much higher than the median because a small number of very large policies, often held by wealthier families, pull the average upward. If all policyholders were lined up from the smallest balance to the largest, the median would be the one in the middle, making it a better measure of what a typical family actually has.

Put the numbers together, and the trend is clear: fewer families own these policies, and most of those who do have balances in the low five figures. By comparison, 54.9% of families had retirement accounts in 2025, which is where most households now keep their long-term savings.

Four Choices for a Retiree With an Old Policy

Who Can Still Benefit From Keeping One

Some owners have good reasons to keep their policy. Families using estate planning may value the income-tax-free death benefit as a way to leave money to heirs or help cover expenses at death (we put the full estate settlement checklist, beneficiary forms, and titling included, in a free guide here). A spouse who relies on the insured person's pension or Social Security may lose some of that income after the insured dies, and the policy payout can help replace the gap.

A fully paid-up policy is the simplest situation. No further premiums are owed, and the coverage stays in force, although any outstanding policy loans can still accrue interest and reduce the death benefit.

Ask the Insurer for This One Document

Before keeping the policy, borrowing against it, surrendering it, or changing it, the owner should request a current in-force illustration from the insurance company. This document shows how the policy is expected to perform from here, including projections under both guaranteed rates and the insurer's current crediting rates or dividend scale. It also helps answer a basic question: how has the policy performed?

With the typical balance at $12,000, the financial stakes are modest for most families, but the decision still matters. The illustration turns a half-forgotten policy into numbers a family can use to decide.

Help Avoid These 13 Retirement Mistakes Before They Derail Your Future

One investment mistake could create big risks for your retirement. Many investors make the same critical errors: being too conservative, making big bets on “sure things,” or paying excessive fees. Any of those blunders can endanger your hard-earned savings.

Now you can learn the mistakes even experienced investors make (and ways you can sidestep them before it’s too late) with this new guide: 13 Retirement Mistakes and How to Avoid Them from Fisher Investments. (sponsor)