Yes. The cash value of whole-life insurance will have a fixed interest rate that it pays. Universal Life insurance will have an interest rate that can be adjusted by the insurance company. Term does not have a cash account so it does not pay interest.
Some whole-Life policies also pay dividends.
Agent Owner, Gilmore Insurance Services, Marysville, Washington State
Depending on the type of policy, it can. With universal life policies, most use an interest rate applied to the cash accumulation account. With these plans, the gains from the paid interest rates are tax deferred. With traditional whole life policies sold by mutual companies (those who also pay dividends) the gains can be contributed to an interest bearing account.
However, using this option does create a current taxable income on the gains the account has. So, not really the best option for a life insurance policy where the goal may be tax deferral on the gains.
Founder, Abrams Insurance Solutions, Inc., San Diego, CA
Term insurance does not accrue interest and whole life policies accrue dividends. Universal life insurance does accrue interest. There are 3 different types of universal life insurance that will accrue interest:
Fixed Universal Life - accrues interest based on a rate by the insurance company
Indexed Universal Life - pays interest determined by an external index, such as the S & P 500. If the index goes up, then interest is paid, usually up to a cap. If the index is negative, then there is usually a floor of 0 - 2%, so no interest may be paid, but this policy provides downside protection.
Variable life - interest is paid according to the stock or bond market. This cash value in a variable policy may go up or down depending on the market.
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Some whole-Life policies also pay dividends.
However, using this option does create a current taxable income on the gains the account has. So, not really the best option for a life insurance policy where the goal may be tax deferral on the gains.
Fixed Universal Life - accrues interest based on a rate by the insurance company
Indexed Universal Life - pays interest determined by an external index, such as the S & P 500. If the index goes up, then interest is paid, usually up to a cap. If the index is negative, then there is usually a floor of 0 - 2%, so no interest may be paid, but this policy provides downside protection.
Variable life - interest is paid according to the stock or bond market. This cash value in a variable policy may go up or down depending on the market.