Which type of insurance policy typically has a cash value component?

Whole life insurance is a type of insurance policy that includes a cash value component. This cash value accumulates over time, allowing policyholders to save money within their insurance policy. The growth of this cash value is typically on a tax-deferred basis, meaning that the policyholder will not pay taxes on the growth until they withdraw it.

The cash value can be accessed by the policyholder through loans or withdrawals, providing financial flexibility. Additionally, if the policy is surrendered, the policyholder can receive the accumulated cash value, minus any outstanding loans.

In contrast, term life insurance does not accumulate cash value and only pays out a death benefit if the insured passes away during the term of the policy. Disability insurance provides income replacement if the insured becomes disabled but does not have a cash value component. Accidental death insurance solely pays a benefit if death occurs due to an accident and also lacks a cash value feature. Thus, whole life insurance stands out as the policy that allows for the accumulation of cash value over time.