Which type of life insurance policy accumulates cash value over time?

The correct answer encompasses both whole life insurance and universal life insurance, as these two types of policies are designed to accumulate cash value over time.

Whole life insurance is a type of permanent life insurance that provides coverage for the insured's entire lifetime, as long as premiums are paid. In addition to the death benefit, whole life policies build 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, although any outstanding loans will reduce the death benefit.

Universal life insurance is also a permanent life insurance product that combines a death benefit with a cash value component. It offers greater flexibility than whole life insurance in terms of premium payments and death benefits. Universal life policies typically have a cash value that grows based on a credited interest rate, which may fluctuate over time based on the insurer's investment performance. Policyholders can make contributions above the required premium, which can further increase the cash value.

In contrast, term life insurance is purely designed to provide a death benefit for a specified term or period, such as 10, 20, or 30 years. It does not accumulate cash value, which distinguishes it from the other two options. Therefore, the correct response highlights the characteristics of