As the cash value increases in a traditional whole life policy, the net amount at risk does what?

In a traditional whole life insurance policy, the net amount at risk refers to the difference between the death benefit and the cash value of the policy. As the cash value increases over time, it serves as a savings component that builds up within the policy. Since the death benefit remains constant, the growth of cash value effectively reduces the insurer's risk.

Thus, as the cash value accumulates, the net amount at risk decreases. This reduction occurs because the insurer's obligation to pay the death benefit is lessening relative to the amount that has been funded through the cash value. Consequently, with each passing year as cash value grows, the insurer's liability becomes lower, leading to a decrease in the net amount at risk.