How Does Cash Value Life Insurance Work? 
There are four types of permanent life insurance policies that have the potential to accumulate cash values : participating whole life , current interest rate universal life , index universal life and variable life . Participating whole life credits dividends when declared , i.e. there not guaranteed . The other three are current assumption universal life policies that can credit an interest rate , an index return or a separate sub account performance -LRB- which could be negative -RRB- with access to market equities and bonds . After the policy fee , premium load , admin expense and cost of insurance is paid , the earnings , if any , are credited to the account cash values and net premium . Keep in mind these policies generally have surrender charges applied to the cash values account in the early years of the contact . 