What is a typical feature of a whole life insurance policy?

A typical feature of a whole life insurance policy is that it accumulates cash value over time. This characteristic distinguishes whole life insurance from term insurance, which does not have a cash value component. The cash value in a whole life policy grows at a guaranteed rate and can be accessed by the policyholder through loans or withdrawals, providing a potential source of funds for emergencies or other financial needs.

This accumulation of cash value can serve as an additional financial resource and contributes to the overall appeal of whole life policies, as they combine lifelong coverage with the opportunity for savings growth. In contrast, the other options either represent features of different types of insurance or mischaracterize features of whole life insurance. For instance, a limited pay period refers to a policy where premiums are paid for a set number of years but does not apply to all whole life policies. Whole life insurance is generally more expensive than term insurance, which provides coverage for a limited time without a cash value. Additionally, whole life does not require annual renewal, unlike term insurance, which must be renewed or converted at the end of its term.