What type of value does a whole of life policy accumulate over time?

A whole of life policy accumulates a cash surrender value over time, which is a key feature of this type of insurance. This value represents the amount that the policyholder can receive if they decide to cancel the policy before its maturity or before the insured event occurs.

As premiums are paid, a portion is allocated towards building cash value, which can grow over the years due to potential interest accumulation or investment returns, depending on the specific design of the policy. This cash surrender value offers policyholders financial flexibility and can be accessed through loans or withdrawals, although doing so may reduce the death benefit.

In contrast, net present value refers to the current worth of a series of cash flows, market value pertains to how much an asset could fetch in a competitive auction, and future investment value relates to the expected amount an investment will grow to over a specific period, which does not apply directly to the features of a whole life insurance policy in the same way.