What component in a permanent life insurance policy serves as a savings element?

In a permanent life insurance policy, the cash value serves as the savings element. This component accumulates over time as part of the policyholder's premium payments. A portion of the premium goes towards funding the policy's death benefit, while another portion is allocated to build the cash value. This cash value grows on a tax-deferred basis, meaning the policyholder does not have to pay taxes on that growth as long as it remains within the policy.

The cash value can be accessed by the policyholder through policy loans or withdrawals, providing a way to utilize the savings aspect of the policy. Additionally, the cash value can be used to pay premiums, thus lending flexibility to the policyholder's financial planning.

While other options may contribute to various aspects of the insurance policy, they do not serve the same function as the cash value. For instance, a dividend fund refers to dividends that may be paid by participating whole life policies, which are not guaranteed and demonstrate the company’s profit participation. Policy reserves are amounts set aside by the insurance company to ensure benefits can be paid and are not accessible to policyholders. Contingent value is not a standard term used in life insurance policies and would not be related to the savings component.