What is a common characteristic of whole life insurance?

Whole life insurance features a cash value component that distinguishes it from term life insurance, which only provides coverage for a specified period. As premiums are paid over the life of the policy, a portion goes into a cash value account that grows at a guaranteed rate, allowing policyholders to accumulate savings over time. This cash value can be accessed through withdrawals or loans during the policyholder's lifetime, which adds a layer of flexibility and financial planning benefits.

In contrast, term insurance is designed for coverage for a limited time and does not accumulate cash value, making it unsuitable for this characteristic. Whole life policies also require ongoing premium payments while the insured is alive, ensuring continued coverage and growth of the cash value. Furthermore, whole life insurance always includes a death benefit, with the cash value being an additional feature rather than the primary focus.