Which life insurance policy provides coverage that is permanent and builds cash value?

Whole life insurance is a type of life insurance policy that provides coverage for the insured’s entire lifetime, as long as the premiums are paid. One of its defining features is the accumulation of cash value over time. This cash value builds at a guaranteed rate, allowing policyholders to access it through loans or withdrawals, which can provide financial flexibility.

Whole life insurance not only ensures a death benefit to beneficiaries, but it also serves as a savings or investment component, making it a popular choice for those looking for lifelong coverage with the added benefit of cash value accumulation. The premiums for whole life insurance typically remain level throughout the life of the policy, contributing to the predictability of both costs and benefits.

In contrast, term life insurance offers temporary coverage without any cash value component. Universal life insurance also provides permanent coverage and builds cash value, but it includes flexible premium payments and adjustable death benefits, which can be complex for some policyholders. Endowment life insurance is designed to pay out a lump sum either at the end of a specified term or upon the death of the insured, but its primary purpose is not to provide lifelong coverage with cash value like whole life insurance.