What condition must be met for cash value to develop in an adjustable life policy?

For cash value to develop in an adjustable life insurance policy, the premiums paid must exceed the costs of the policy. In an adjustable life policy, part of the premiums contributes to the insurance coverage and part goes into the cash value component. If the premiums are sufficient to cover the cost of the insurance and additional expenses associated with the policy, this excess can accumulate as cash value.

As the cash value grows, it can be borrowed against or withdrawn, providing the policyholder with financial options. It’s important to remember that if the premiums paid do not exceed the policy costs, there will be no funds available to create a cash value. Consequently, meeting this condition is essential for cash value accumulation in an adjustable life policy.