Which life insurance policy builds cash value based on the insurer's general account performance?

A whole life insurance policy builds cash value based on the insurer's general account performance. Whole life policies offer a guaranteed cash value accumulation over time, which is determined by the insurer's overall financial performance and investment strategy. This means that a portion of the premiums paid by the policyholder goes into the insurer's general account, which is invested in various stable assets such as bonds and mortgages.

The cash value component of a whole life policy grows at a guaranteed rate set by the insurer, often with some additional dividends depending on the company's performance. Policyholders have the opportunity to borrow against this cash value or withdraw funds if necessary, making it a valuable financial asset.

In contrast, universal life policies allow for flexible premium payments and can vary in cash value growth based on interest rates but are not strictly tied to the general account. Variable life policies have a cash value that is tied to separate accounts, which are akin to mutual funds, allowing for greater potential growth but also carrying higher risk. Term life policies do not build any cash value at all, as they are designed solely for death benefit protection during a specified term.