Which term describes an insurance policy that provides a guaranteed death benefit and a cash value component?

The term that describes an insurance policy providing a guaranteed death benefit along with a cash value component is whole life insurance. This type of insurance is designed to last for the insured's entire lifetime, ensuring that a death benefit is paid out to the beneficiaries upon the policyholder's death, regardless of when that occurs, as long as premiums are paid.

In addition to the guaranteed death benefit, whole life policies accumulate cash value over time. This cash value grows at a guaranteed rate and can be accessed by the policyholder through loans or withdrawals, making it a unique financial tool that combines life insurance coverage with a savings element.

While other types of life insurance, such as universal life and variable life, also provide death benefits and cash value components, they differ significantly in terms of flexibility, investment options, and how cash value is accrued. Universal life insurance offers more flexibility in premium payments and death benefits, while variable life insurance allows policyholders to invest cash value in various investment options, which introduces market risk. Unlike these options, whole life insurance’s structure and guarantees make it a straightforward choice for those seeking consistent coverage and cash value growth.