How can a policyholder access the cash value of a whole life policy?

A policyholder can access the cash value of a whole life policy primarily through loans or withdrawals, which is why this choice is correct. Whole life insurance accumulates cash value over time, allowing policyholders to tap into this value as needed.

With a loan against the cash value, the policyholder can borrow funds, often at a relatively low interest rate, without incurring tax consequences as long as the policy remains in force. The loan does not require repayment; however, if not repaid, it will reduce the death benefit.

Withdrawals allow the policyholder to take out a portion of the cash value, but this can impact the policy's overall value and may also have tax implications depending on how much is withdrawn relative to the premiums paid.

Cashing out the policy immediately refers to surrendering the policy for its cash value but generally involves a more abrupt and often penalized exit from coverage, which doesn't capitalize on the benefits of the policy's cash value in a beneficial way like loans or withdrawals do.

Selling the policy to another party, while it is an option in certain situations known as a life settlement, is not a common approach to access cash value directly and often does not result in retaining life insurance coverage.

The concept