What happens to the cash value of a whole life insurance policy if the insured passes away?

When the insured passes away while holding a whole life insurance policy, the cash value of the policy is indeed paid out to the beneficiary along with the death benefit. This is an important feature of whole life insurance, as it provides both a death benefit and a savings component.

The death benefit is the primary advantage of a life insurance policy, intended to provide financial support to the beneficiaries after the policyholder's death. The cash value, which accumulates over time, is an additional asset that adds to the total amount the beneficiaries receive.

In the event of the insured's death, the total payout typically consists of the death benefit plus any cash value that has built up, ensuring that the beneficiaries receive a greater amount. This aspect provides a layer of financial security and can help cover expenses such as funeral costs, debt repayment, or ongoing living expenses for the beneficiaries.

Thus, option B accurately captures the key element of how a whole life policy works during the death of the insured, inclusively covering both parts of the policy’s value.