What type of insurance provides cash value that grows over time?

Whole life insurance is a type of permanent life insurance that not only provides a death benefit but also accumulates cash value over time. This cash value grows at a guaranteed rate set by the insurer, and policyholders can borrow against or withdraw from this value during their lifetime. This aspect of whole life insurance differentiates it from term life insurance, which provides coverage only for a specified term without any cash value component.

The cash value in whole life policies can serve various purposes, such as supplementing retirement income or providing funds for emergencies, making it a versatile financial tool. Additionally, the policy's cash value grows on a tax-deferred basis, meaning that policyholders won’t owe taxes on the gains as long as the money remains within the policy.

In contrast, term life insurance provides coverage for a specific period and does not accumulate any cash value. Accidental death insurance typically pays a benefit only in the case of accidental death, while simplified issue insurance is a type of life insurance that streamlines the application process but does not specifically indicate the presence or absence of cash value. Therefore, whole life insurance stands out as the option that features a cash value component that accumulates over time.