Which type of policy accumulates cash value over time?

A permanent policy is a type of insurance that accumulates cash value over time. This is an essential feature that distinguishes permanent policies from term policies. The cash value is a savings component that grows at a guaranteed rate set by the insurer and can be accessed by the policyholder during their lifetime. This access can be in the form of policy loans or withdrawals, providing flexibility and additional financial options.

In contrast, term policies offer coverage for a specified period without any cash value accumulation. They are designed to provide protection for a limited time and do not build equity, making them purely risk protection instruments. Likewise, an accidental death policy specifically provides coverage for death resulting from accidents, without any cash value component, focusing solely on the payout upon an accident.

Temporary policies, similar to term insurance, provide short-term coverage and do not accumulate cash value either. Therefore, the focus on the cash value accumulation clearly aligns with permanent policies, making it the correct choice in this context.