Which life insurance policies have cash value?
Whole life insurance: The cash value in whole life insurance grows at a guaranteed, expected rate of return. It’s good for someone who wants no surprises with cash value growth.
Indexed universal life insurance: The cash value gains for indexed universal life insurance policies are linked to an index such as the S&P 500. It’s for someone who wants to participate in the financial markets and is open to some risk with the cash value, meaning it can lose value.
Variable universal life insurance: The cash value growth (or loss) is tied to “sub-accounts” for which you pick your own investments, such as stock or bonds. It’s for people who want to actively manage the investments and who are OK with a risk of losing their cash value.
Not all life insurance policies have cash value. These don’t:
- Term life insurance
- Guaranteed universal life
