Which insurance type typically has a higher premium due to its increasing cash value?

The insurance type that typically has a higher premium due to its increasing cash value is whole life insurance. Whole life policies are designed to provide a death benefit as well as accumulate cash value over time. The premiums for whole life insurance are generally higher compared to other forms of life insurance because a portion of the premium contributes to the cash value component, which grows at a guaranteed rate.

Limited pay life insurance also falls under the category of permanent life insurance, which accumulates cash value, but the premiums are usually paid for a limited time, such as 10 or 20 years, after which the policy remains in force without requiring further premiums. While the premiums may be significant during the payment period, the entire premium schedule does not necessarily create a higher premium than whole life policies, which require payments throughout the insured's lifetime.

Term life insurance provides a death benefit for a specific term and does not build any cash value, leading to lower premiums than whole or limited pay life products. Credit life insurance is designed to pay off a borrower's debt in case of death and does not accumulate cash value, thereby also having lower premiums.

Therefore, the increased premium associated with whole life insurance can be attributed to its dual purpose of providing both insurance coverage and the benefit of cash