Which policy typically has higher premiums, but guarantees a cash value accumulation?

Whole life insurance is designed to provide both a death benefit and a cash value accumulation feature, resulting in higher premiums compared to term life insurance policies. With whole life insurance, a portion of the premium goes towards building cash value, which grows over time at a guaranteed rate, unlike term policies that only provide coverage for a specified period without any cash value component.

The guaranteed cash value provides policyholders with the opportunity to borrow against it or receive it upon policy surrender. This element of cash value accumulation, combined with the lifelong coverage that whole life insurance offers, justifies the higher premiums associated with these policies.

In contrast, term life insurance solely provides a death benefit for a specific term of years and has no cash value, which is why premiums are lower. Adjustable life insurance offers flexibility in premium payments and death benefits but typically does not guarantee cash value in the same way whole life insurance does. Term convertible insurance allows a term policy to be converted into a permanent one but does not inherently include cash value accumulation until the conversion occurs.