In indexed whole life insurance, what does the cash value depend on?

In indexed whole life insurance, the cash value is linked to the performance of a specified equity index, such as the S&P 500. This means that the cash value will increase in relation to the performance of that index, allowing policyholders to benefit from market gains while still enjoying the stability of whole life insurance. The design of indexed whole life insurance typically includes a floor to prevent losses, ensuring that the cash value will not decrease even if the index performs poorly.

The choice related to the performance of the insurer's bond portfolio pertains to other types of insurance products that might guarantee returns through fixed investments. The fixed interest rate offered refers more to traditional whole life policies or other guaranteed products that focus on stable returns rather than market performance. Lastly, while total premiums paid contribute to the overall value and benefits of the policy, they do not specifically dictate how the cash value grows in indexed whole life insurance, which is fundamentally tied to the performance of the chosen equity index.