What distinguishes cash value life insurance from term life insurance?

Cash value life insurance differs from term life insurance primarily through the inclusion of an investment component alongside the insurance coverage. With cash value policies, a portion of the premium payments contributes to a cash value account, which grows over time. This cash value can be borrowed against or used for other financial needs, providing an additional financial resource while still maintaining the death benefit of the policy.

In contrast, term life insurance is designed only to provide a death benefit for a specified term, with no cash value accumulation. This distinguishes it from cash value policies, which serve not only the purpose of providing a death benefit but also act as a savings or investment vehicle. The higher premiums associated with cash value policies reflect this added feature of investment growth. Therefore, the combination of insurance and investment components uniquely defines cash value life insurance.