Which statement is true regarding permanent insurance compared to term insurance?

The statement that permanent insurance typically accumulates cash value is accurate. Permanent life insurance is designed to last a lifetime and includes a savings component, known as cash value, which grows over time. This cash value can be borrowed against or withdrawn, providing policyholders with financial flexibility.

In contrast, term insurance provides coverage for a specified period and does not accumulate cash value; it is generally less expensive than permanent insurance but lacks the investment component. The ability to build cash value is one of the key features that distinguishes permanent insurance from term insurance, making it a more comprehensive option for lifelong coverage and potential investment growth.

Understanding the primary characteristics of these insurance types helps clarify the importance of cash value accumulation as a major advantage of permanent insurance.