What happens to the cash value when you die? The cash value in any life insurance policy does not belong to the owner of the policy. The cash value is an asset belonging to the insurance company which they will use to pay the claim, which will surely come due, when the insured finally dies. Now if the owner of the policy would relieve the insurance company of the obligation of paying the claim, by cancelling the policy or lapsing the policy, the cash value in the policy is no longer needed by the insurance company, so they will give it to the owner of the policy under the terms of the policy's "non-forfeiture" clause. People often ask "If that's my cash value, why don't I get it when I die in addition to the insurance benefit?" There's two reasons. First, you're dead and can't cash a check. Second, it's NOT your cash value. It's just easier for the agent to pretend that it is. Don't worry, though. You can have it if you take the company off the hook. That's only fair.

[from insurance faq]

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