Final answer:
Cash-value whole life insurance provides lifetime protection and accumulates cash value, offering a death benefit and a savings element that can be used by the policyholder during their lifetime.
Step-by-step explanation:
Type of Insurance that Offers Lifetime Protection and Accumulates Cash Value
The type of insurance that provides lifetime (permanent) protection and accumulates cash value is known as cash-value whole life insurance. This insurance product offers a death benefit to protect beneficiaries in the event of the insured individual's death, as well as a cash value component that grows over time. The accumulated cash can serve as an account that the policyholder can use during their lifetime. Policyholders can borrow against the policy's cash value, with the understanding that they need to repay the loan with interest.
Like other types of insurance—such as health insurance, car insurance, and house or renter's insurance—life insurance is essential for financial planning. Premiums are calculated based on the risk and the probability of events occurring within a group, and these premiums support the pool of funds used to pay out claims and accumulate cash values for whole life policies.
Accumulating cash value in whole life insurance policies can also be a part of retirement planning, as it represents a lower-risk component relative to stocks or bonds, thereby providing a fixed return. However, one should be aware of the trade-offs between potential returns and the degree of risk when considering insurance as part of a comprehensive financial strategy.