What is Accumulation Value?
The accumulation value is the sum of money within a life insurance policy, specifically in the cash value or investment portion, that accumulates over time. This value is primarily associated with permanent life insurance policies like Indexed Universal Life insurance or Whole Life Insurance. It reflects the growth of premium payments, less applicable charges, plus any interest or investment earnings.
In Indexed Universal Life insurance, the accumulation value may increase based on a chosen stock index, while in Whole Life Insurance, it grows at a guaranteed interest rate. The accumulation value can be accessed through policy loans, withdrawals, or surrendering the policy, making it a flexible asset for the policyholder.
Additionally, the accumulation value impacts the policy’s death benefit, as it may allow for a higher payout if the policyholder passes away. However, withdrawals or loans against this value can reduce the death benefit if not repaid. This component makes permanent life insurance appealing for individuals seeking both protection and an investment vehicle.