The portion of a
whole life insurance policy that is set aside and
invested by the insurance company. Part of the policyholder's
premium each month becomes part of the savings element, as do any
gains from investment. The savings element becomes available to the
policyholder upon the cancellation of the policy. Furthermore, the savings element is an
asset belonging to the policyholder; it can be
borrowed against or used as
collateral. The amount of
money in the savings element is called the
cash-surrender value. Any investment gains in the savings element are
tax-deferred until the policy is canceled.