What is a key feature of whole life insurance?

Whole life insurance is designed to provide lifelong coverage and includes a key feature of cash value accumulation. This means that over time, a portion of the premiums paid into the policy builds up cash value, which can be accessed or borrowed against by the policyholder. This cash value grows at a guaranteed rate set by the insurance company and provides a savings component that can enhance the policy's benefits.

The fact that whole life insurance encompasses this cash value component is significant because it distinguishes it from term life insurance, which provides death benefits for a specified time period without any cash value accumulation. Understanding this aspect helps policyholders see whole life insurance not just as a protection measure, but as a financial asset that can serve various needs throughout their lifetime.