What is a key feature of whole life insurance?

Whole life insurance is characterized by having a cash value component that accumulates over time. This cash value is a savings element that grows at a guaranteed rate, typically referenced as part of the policy’s benefits, allowing policyholders to access funds through loans or withdrawals while the policy remains in force. This feature distinguishes whole life insurance from term insurance, which does not build cash value and only provides a death benefit.

As the policyholder makes premium payments, a portion goes toward the insurance cost, while the remainder contributes to the cash value. This cash value can provide financial flexibility, as it serves as a resource for emergencies or other financial needs.

In contrast, the other options describe features that do not accurately define whole life insurance. Some policies may have limited premium payment terms, but whole life is typically characterized by lifetime premium payments. While it does provide a death benefit, the benefit being fixed does not capture the essence of whole life insurance. Moreover, whole life insurance is generally more expensive than term insurance due to its cash value accumulation and lifetime coverage guarantees.