Which type of life insurance typically builds cash value over time?

The correct choice indicates that both whole life insurance and universal life insurance are designed to build cash value over time, which is a defining characteristic of these types of policies.

Whole life insurance provides a guaranteed cash value accumulation in addition to offering a death benefit. This cash value grows at a consistent rate, allowing policyholders to borrow against it or withdraw funds if needed. The premium payments for whole life insurance remain constant over the life of the policy, thus ensuring predictable growth of the cash value.

Universal life insurance also accumulates cash value, but with greater flexibility in terms of premium payments and death benefits. Policyholders can adjust their premiums and the amount of insurance as their financial needs change over time. The cash value in a universal life policy grows based on current interest rates, which can offer the potential for increased growth compared to whole life.

Term life insurance, on the other hand, does not build cash value. It is designed to provide coverage for a specific period (the "term") and pays a death benefit if the insured passes away during that term. Since it lacks a cash value component, it is purely a protection product without savings or investment features.

Thus, the answer accurately reflects the fact that whole life and universal life insurance are the types