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. Value Investing

    The strategy of selecting stocks that trade for less than their ...
  3. Intrinsic Value

    1. The actual value of a company or an asset based on an underlying ...
  4. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected ...
  5. Book Value

    1. The value at which an asset is carried on a balance sheet. ...
  6. Term Life Insurance

    A policy with a set duration limit on the coverage period. Once ...
Related Articles
  1. 15 Insurance Policies You Don't Need
    Insurance

    15 Insurance Policies You Don't Need

  2. Calculating The Present And Future Value ...
    Investing Basics

    Calculating The Present And Future Value ...

  3. How To Use Price-To-Sales Ratios To ...
    Markets

    How To Use Price-To-Sales Ratios To ...

  4. Understanding The Time Value Of Money
    Investing Basics

    Understanding The Time Value Of Money

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center