Which Life Insurance Policies Include a Cash Value Feature?

Only permanent life insurance policies—whole life and universal life—accumulate cash value. Term life insurance provides coverage for a set period and offers no cash‑value component.

Whole Life Insurance

Whole life is a fixed‑premium, permanent policy that guarantees a death benefit and builds cash value at a predictable rate. The policy's cash value grows tax‑deferred and can be borrowed against or withdrawn, though loans reduce the death benefit.

Universal Life Insurance

Universal life combines a flexible premium structure with a cash‑value account that earns interest based on market performance or a guaranteed rate. Policyholders can adjust the death benefit and premium payments, but cash value growth depends on the insurer's investment returns.

Term Life Insurance

Term life provides coverage for a specified term, such as 10, 20, or 30 years, and has no cash‑value component. It is a straightforward, low‑cost option for those who only need temporary coverage.

Choosing the Right Option

Deciding between permanent and term life depends on financial goals, budget, and the need for an investment component. Permanent policies offer lifelong protection and a savings vehicle, while term life delivers pure coverage at a lower cost.