Which of the following is a living benefit of a policy that builds cash value?

A living benefit of a policy that builds cash value refers to the ability of the policyholder to access funds while they are still alive, as opposed to the death benefit which is only payable upon the insured's death. In this context, the correct answer highlights that the cash value accumulated in a life insurance policy can be used to fund significant expenses, such as a college education.

Policies that build cash value, such as whole life or universal life insurance, allow policyholders to borrow against or withdraw a portion of the cash value. This aspect makes it a versatile financial tool that can support future needs. Therefore, using the cash value of a life insurance policy to fund education expenses exemplifies how it serves as a living benefit, providing liquidity and utility beyond traditional insurance protection.

In contrast, while life insurance protection and guaranteed returns of premiums relate to the benefits provided by the policy upon death or termination, they do not speak to the living benefits available during the policyholder's lifetime. Tax deductions typically do not apply to the cash value of life insurance policies, further distinguishing them from the living benefit context. Each of these points reinforces why the funding of a college education through the policy's cash value is aptly identified as a living benefit.