Which statement about a whole life policy is correct?

In a whole life policy, one of its defining features is the accumulation of cash value over time. This cash value grows on a tax-deferred basis and policyholders have the option to borrow against this amount. This is beneficial because it allows the insured to access funds without needing to terminate the policy, as long as the loan is repaid, or it will reduce the death benefit if left unpaid. This characteristic of whole life policies makes the correct statement about being able to borrow against the cash value.

In contrast, the other statements do not accurately describe the properties of whole life insurance. Premiums for whole life policies are typically fixed and do not adjust annually, coverage does not expire at a certain age but remains in force for the life of the insured, and the death benefit generally remains level rather than decreasing over time. These foundational elements differentiate whole life insurance from term life or other types of policies that may exhibit these characteristics.