What is a common characteristic of life insurance cash values upon the insured's death?

A common characteristic of life insurance cash values upon the insured's death is that they remain unchanged. In a whole life or universal life insurance policy, the cash value is a component that builds over time, but it is separate from the death benefit. When the insured passes away, the insurance company pays the designated beneficiaries the death benefit, which is typically the face amount of the policy, not the cash value.

The cash value does not increase the death benefit, as it is not factored into the amount paid out to beneficiaries. Furthermore, the cash value also does not reduce the death benefit upon the insured's death, meaning that the full death benefit is paid regardless of the cash value accumulated. While cash values can be subject to taxation if policy loans are outstanding or if the policy's cash surrender value is realized, the death benefit itself is typically not taxable to the beneficiaries. Thus, the characteristic that the cash value remains unchanged at the time of the insured’s death is essential in understanding how life insurance benefits are structured.