West Virginia State Life Insurance Practice Exam

Which of the following types of life insurance typically has a cash value component?

1. Term Life Insurance

2. Whole Life Insurance

3. Accidental Death Insurance

4. Group Life Insurance

The correct answer is: Whole Life Insurance

Whole life insurance is a type of permanent life insurance that includes a cash value component. This means that a portion of the premiums paid is allocated towards a cash value account, which grows over time at a guaranteed rate. Policyholders can access this cash value through loans or withdrawals, providing a source of funds that can be utilized during their lifetime. Additionally, the cash value is not subject to income tax while it remains within the policy, making it an attractive feature for long-term planning. In contrast, term life insurance provides coverage for a specified duration without any cash value accumulation. Accidental death insurance only pays benefits in the event of death resulting from an accident and does not include a cash value component. Group life insurance is typically offered by employers to their employees and usually provides pure death benefits without any cash value growth. Thus, whole life insurance stands out for its combination of lifelong coverage and the financial benefits of cash value accumulation.