Accumulated Value

AAA

DEFINITION of 'Accumulated Value'

The total amount an investment currently holds, including the capital invested and the interest (gain) it has earned to date. Accumulated value is important in the insurance field because it refers to the total acquired value in cash value life insurance. It is calculated as the sum or total of the initial investment plus the interest earned to date.


Also referred to as accumulated amount or cash value.

INVESTOPEDIA EXPLAINS 'Accumulated Value'

For example, the accumulated value of a fixed annuity is the quantity invested plus the interest collected, subtracting any fees or previous withdrawals. For insurance purposes, this value begins to accumulate when the policy holder pays a monthly premium. This premium pays for the insurance cost, policy expenses and other related expenses. The resulting amount after these costs and expenses are deducted is placed in an internal account by the insurance company. This amount placed in the internal account gains compounded interest and is considered the accumulated value.


The accumulated value can be thought of as a forced savings account. The policy owner can even borrow against the accumulated value while keeping the policy intact. If the policy owner cancels the policy, they can cash it in for the cash value although penalties may be incurred.

RELATED TERMS
  1. Embedded Value

    A common valuation measure used outside North America, particularly ...
  2. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected ...
  3. Term Life Insurance

    A policy with a set duration limit on the coverage period. Once ...
  4. Value Investing

    The strategy of selecting stocks that trade for less than their ...
  5. Book Value

    1. The value at which an asset is carried on a balance sheet. ...
  6. Intrinsic Value

    1. The actual value of a company or an asset based on an underlying ...
RELATED FAQS
  1. No results found.
Related Articles
  1. Insurance

    15 Insurance Policies You Don't Need

    Learn how to save money by saying "no" to unnecessary coverage.
  2. Investing Basics

    Calculating The Present And Future Value Of Annuities

    At some point in your life, you may have had to make a series of fixed payments over a period of time - such as rent or car payments - or have received a series of payments over a period of time, ...
  3. Markets

    How To Use Price-To-Sales Ratios To Value Stocks

    Take a look at how this effective ratio can be influenced by certain critical factors.
  4. Investing Basics

    Understanding The Time Value Of Money

    Find out why time really is money by learning to calculate present and future value.
  5. Options & Futures

    The Importance Of Time Value In Options Trading

    Move beyond simply buying calls and puts, and learn how to turn time-value decay into potential profits.
  6. Retirement

    Variable Vs. Variable Universal Life Insurance

    Do you know why you might need one policy versus the other? Read on to find out.
  7. Markets

    Intangible Assets Provide Real Value To Stocks

    Intangible assets don't appear on balance sheets, but they're crucial to judging a company's value.
  8. Options & Futures

    Long-Term Care Insurance: You Have Options

    The latest offerings provide more coverage and the ability to pick and choose what types of coverage you'll need.
  9. Savings

    The Top 4 Discount Travel Websites

    Planning a trip? Find out how to save on airfare, hotels, rental cars and more.
  10. Savings

    Mortgage Faceoff: Bank of America Vs. Wells Fargo

    Which bank offers the better mortgage deal? Here's how they compare on two popular types of mortgage.

You May Also Like

Hot Definitions
  1. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  2. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  3. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  4. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
  5. Investment Grade

    A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such ...
  6. Fringe Benefits

    A collection of various benefits provided by an employer, which are exempt from taxation as long as certain conditions are ...
Trading Center