What type of policy is characterized by a face amount that increases over time and has an accumulated cash value?

The correct choice describes a Universal Life Policy, which is designed to offer flexible premium payments, adjustable death benefits, and an accumulating cash value component that grows over time. One of the defining features of a Universal Life Policy is that the face amount can increase, allowing policyholders to respond to changing financial needs or goals over the life of the policy.

In this type of policy, a portion of the premiums paid goes towards the insurance cost, while another portion contributes to the cash value, which earns interest. This accumulation of cash value and the potential for increasing the death benefit make Universal Life Policies a versatile option for many individuals.

The other options do not encapsulate the described characteristics as effectively. For instance, a Modified Whole Life Policy typically has a level premium structure that changes over time, but it does not inherently feature an increasing death benefit similar to that of Universal Life. An Increasing Term Life Policy provides a death benefit that increases, but it generally lacks a cash value accumulation. Nonparticipating policies do not allow policyholders to receive dividends and generally have fixed benefits, which does not align with the idea of an increasing face amount over time.