Question

When does the cash value or living benefits accumulate?

a) Throughout the entire policy term
b) Only during the initial policy years
c) After the policy reaches a certain age
d) At the time of the insured's death

Answer 1

The cash value in a cash-value (whole) life insurance policy accumulates throughout the entire policy term and acts as a financial resource that can be accessed by the policyholder, serving both as a death benefit and as a savings account with a guaranteed rate of return.

Step-by-step explanation:

The cash value or living benefits in a cash-value (whole) life insurance policy typically accumulates throughout the entire policy term.

This growing cash value component of the policy can provide financial flexibility to the policyholder, as it can be used as a source of funds that can be borrowed against or even withdrawn if the policy allows.

However, it is essential to note that any outstanding loans or withdrawals may reduce the death benefit.

Cash-value life insurance serves as both a death benefit to beneficiaries and as a savings account for the policyholder. One key aspect of these types of policies is that they often have a guaranteed rate of return on the cash value,

meaning that the cash accumulation is not only consistent over the life of the policy but also carries a certain degree of predictability and security for the policyholder's investment.