A policy that typically has a cash value that can be borrowed against is which type of policy?

• A. Whole life
• B. Term life
• C. Universal life
• D. Variable life

Answer: (A)

This question centers on cash value and loan provisions in life insurance. A whole life policy is designed to build a guaranteed cash value over time, funded by level premiums, and you can borrow against that cash value with interest. The death benefit remains in force, though any loan outstanding reduces the amount paid at death if not repaid. That combination—guaranteed cash value plus loan access—is the classic example of a policy you borrow against.

Term life has no cash value to borrow against, so it doesn’t fit. Universal life and variable life do have cash values and allow policy loans, but their cash value behavior is more variable and tied to credited interest or investment performance, making them less of a straightforward example compared to whole life.