Definition of "Cash Value Life Insurance"

This is a class of life insurance that develops a cash value. Cash value policies have a premium that are generally higher then term insurance in early years and a lower in later years. This additional premium is accumulated inside the policy at an interest rate and is tax preferenced. It is also referred to as permanent insurance because it is designed to remain inforce for an individual's full life. This is compared to term insurance which becomes prohibitively expensive at older ages. These variations are as follows: