What typically happens to the cash value of a whole life policy during the insured's lifetime?

The cash value of a whole life insurance policy is designed to accumulate over time, which is a fundamental characteristic of this type of insurance. As the policyholder pays premiums, a portion of those payments contributes to the cash value, which builds up gradually. This growth is typically guaranteed, and the accumulation happens at a predetermined rate set by the insurance company.

Policyholders can often borrow against this cash value or withdraw from it, providing financial flexibility during their lifetime. This feature differentiates whole life insurance from term insurance, which does not accumulate cash value.

While there are options related to accessing funds and potential returns upon cancellation, the crucial point in understanding whole life policies is recognizing that they are meant to provide growth in cash value as long as the policy remains active.