Which type of insurance policy accumulates cash value over time?

Whole life insurance is designed to accumulate cash value over time, which is one of its key features. Unlike term life insurance, which provides coverage for a specific period without any cash value component, whole life insurance offers lifelong protection as long as premiums are paid. A portion of these premiums is allocated towards building cash value, which grows at a guaranteed rate set by the insurer.

This cash value can be accessed by the policyholder through loans or withdrawals, providing a financial resource if needed. Additionally, the cash value growth is typically tax-deferred, meaning that policyholders do not owe taxes on this growth until they withdraw it.

Universal life insurance also accumulates cash value, but it is more flexible in terms of premium payments and death benefit options, allowing the policyholder to adjust these factors. However, the question specifically indicates whole life insurance, which is distinguished for its predictable growth and guaranteed death benefit along with cash value accumulation.

Term life insurance and declining term insurance, on the other hand, do not build cash value at all and solely provide a death benefit for a specified period.