Financial Answer Center

In addition to providing a death benefit, cash value (or "permanent") life insurance provides tax-deferred growth. Basically, a portion of your premium goes into a savings component. This savings account grows tax-deferred. The different types of cash value life insurance include whole life, universal life, and variable (universal) life.

Whole life, considered the traditional form of permanent insurance, provides for a minimum guaranteed increase in cash value. Universal life allows you to make flexible premium payments, and your cash value increases based on current interest rates. The increase in cash value in a variable life policy depends on the performance of the sub-accounts (funds) you select. For more information, see Learning Center on Buying Insurance.