In which type of insurance does the savings component grow over time?

The type of insurance in which the savings component grows over time is permanent life insurance. This category of insurance encompasses several types of policies that not only provide a death benefit but also include a cash value component that accumulates over time. The growth of this savings component is typically tax-deferred, allowing the policyholder to build value that can be accessed during their lifetime, either through withdrawals or policy loans.

Permanent life insurance policies include whole life, universal life, and others, all of which are designed to last for the lifetime of the insured as long as the premiums are paid. The growth in the cash value can be attributed to premium payments, interest accumulation, and potentially dividends, depending on the policy type. This feature distinguishes permanent life insurance from term insurance, which provides coverage for a specific period without accumulating cash value.

In the case of variable life insurance and universal life insurance, while they also have a savings component, the option that most broadly encompasses all the features of lifetime coverage with a guaranteed growth of cash value is permanent life insurance.