What does the accumulation of cash value in permanent life insurance signify?

The accumulation of cash value in permanent life insurance signifies a key feature that distinguishes it from term life insurance. In permanent life insurance policies, such as whole life or universal life, a portion of the premiums paid goes towards building cash value over time, which can accumulate on a tax-deferred basis. This feature not only provides a savings component that can be accessed or borrowed against during the policyholder's lifetime, but also assures the policyholder that they have more than just a death benefit; they have an asset that can grow in value.

Term life insurance, conversely, does not include this cash value component. It is designed purely to provide a death benefit for a specified term without any savings, investment, or cash accumulation aspect. Consequently, the presence of cash value is a fundamental characteristic that sets permanent life insurance apart from term policies, thereby making the correct answer the distinguishing feature of permanent life insurance.