What Is Life Insurance Equity? 
All cash value life insurance policies have the potential to accumulate equity . But policy expense loads , loan interest cost and surrender charges can reduce the net cash values in any one year . Its important to understand the cost associated with a cash value policy that is designed to generate income for retirement income purposes . If designed to maximize cash accumulation , it can be an alternative to supplement retirement income . If designed incorrectly , it can be one of the worst savings vehicles . The permanent polices that have the potential to accumulate cash values and distribute tax advantaged income are participating whole life and current assumption universal life . Both use crediting methods based on interest rates . Current assumption universal life also offers crediting methods using domestic and foreign indices -LRB- indexed universal life -RRB- and equity / bond subaccounts -LRB- variable universal life . -RRB- 