How long does it take for a life insurance policy to accumulate cash value?

Life insurance accumulates value slowly, based on the amount of cash you invest. If you are only making the regular premiums, the accrual will be slower than if you pay double premiums. This is because your premiums are split up as they are made, paying into the policy and allocating fees to the insurance company. By making premium payments higher than the required amount, you actually build cash value faster and that means your accumulated value will go up faster as more of the money you pay will go directly into the savings portion of the policy.

It is important to understand that even a life insurance policy designed to create a financial vehicle is still primarily intended to provide a pay out on the policyholder's death, not to create as profitable savings account. Life insurance is a way to save money, and you can borrow from the cash value of the account on a tax deferred basis, but the accrual rate is low and it takes years to build up enough cash value to gain a substantial amount of cash.

With that said, such a permanent life insurance policy can provide a tremendous benefit if it is taken out while you are young. This is why gifts of life insurance policies for children are such a good idea. Purchasing a policy while the child is young means that by the time that child is grown and able to receive the policy as his or her own; the value accrued will have grown for many years and continued to earn interest as it did so. A policy purchased within the first few years of a the child's life will accrue enough money by the time the child graduates high school to be useful as the down payment of a home or some other worthy goal. But it takes many years to do this, and trying to use a life insurance policy for a fast or immediate use is simply not a realistic approach to life insurance.