Which type of life insurance allows for cash value accumulation?

The correct answer is permanent life insurance because this type encompasses various policies that provide lifelong coverage and include a cash value component. Unlike term life insurance, which only offers coverage for a specified term and does not accumulate any cash value, permanent life insurance policies are designed to build cash value over time. This accumulation occurs as part of the premiums paid, which are invested by the insurance company.

Whole life insurance and universal life insurance are specific types of permanent life insurance. Whole life insurance offers a guaranteed cash value growth and fixed premiums, while universal life insurance provides flexibility in premium payments and the potential for cash value growth linked to a market index or interest rates. Both of these subtypes still fall under the broader category of permanent life insurance, which allows policyholders to access the cash value during their lifetime or borrow against it. Hence, the cash value accumulation principle is inherent in permanent life insurance policies, making it the most fitting choice for the question.