Sometimes also known as cash-value life insurance, these policies provide permanent insurance, rather than insurance for a fixed number of years. They can also allow you to build up cash value, which you can then use during your lifetime or bequeath to your beneficiaries. If you use the cash value during your lifetime, your death benefit will be reduced.

Cash-value policies, which involve higher premiums than term insurance, come in three varieties. Whole-life insurance has fixed premiums and the ability to have your cash value build. Meanwhile, universal-life insurance offers the flexibility to vary the amount of your annual premium and the ability to withdraw cash from the policy. Finally, with variable-life insurance, you can invest the cash value of a variable universal life insurance policy in a variety of investment options.

However with both universal and variable universal life insurance, if the cash value is not sufficient to cover the cost of the insurance, the policy will lapse.