Which policy type includes a guaranteed cash value?

Which policy type includes a guaranteed cash value?

• A. Term life
• B. Whole life
• C. Group term
• D. Universal life

Answer: (B)

Guaranteed cash value is a feature of permanent life insurance. In a whole life policy, part of each premium builds a cash value that grows at a guaranteed rate. This cash value increases over time and can be accessed through policy loans or by surrendering the policy, all while the death benefit and premiums stay typically constant. Term policies, including group term, provide only a death benefit for a set period and do not accumulate any cash value. Universal life has a cash value component too, but its growth depends on credited interest and can vary, so the cash value isn’t guaranteed in the same way as in whole life. Because of this guaranteed, predictable savings component, whole life is the policy type that includes a guaranteed cash value.

Guaranteed cash value is a feature of permanent life insurance. In a whole life policy, part of each premium builds a cash value that grows at a guaranteed rate. This cash value increases over time and can be accessed through policy loans or by surrendering the policy, all while the death benefit and premiums stay typically constant. Term policies, including group term, provide only a death benefit for a set period and do not accumulate any cash value. Universal life has a cash value component too, but its growth depends on credited interest and can vary, so the cash value isn’t guaranteed in the same way as in whole life. Because of this guaranteed, predictable savings component, whole life is the policy type that includes a guaranteed cash value.