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

A defining characteristic of a whole life insurance policy is that it builds cash value over time. Whole life insurance is designed to provide coverage for the insured's entire lifetime, as long as premiums are paid. One of its key benefits is the savings component, where a portion of the premium payments goes towards building cash value, which grows on a tax-deferred basis.

This cash value accumulates over the years and can be accessed by the policyholder through policy loans or withdrawals, providing a source of funds in the future if needed. This feature differentiates whole life insurance from term life insurance, which does not have any cash value and only provides death benefit protection for a specified period. The growth of cash value contributes to the overall financial security that whole life policies offer, making it an appealing option for many individuals seeking lifelong coverage that also provides a savings element.