Which statement about the cash value of a whole life insurance policy is correct?

The cash value of a whole life insurance policy is a component that builds over time as premiums are paid. Its primary purpose is to serve as a savings element that the policyholder can access during their lifetime. When the policy is surrendered, the policy owner is entitled to receive the accumulated cash value. This means that the correct statement reflects the nature of cash value in that it is categorized as an asset owned by the policyholder, which they can claim upon termination of the policy.

In contrast, the cash value is not directly accessible to the beneficiary upon the insured's death, as that is typically the realm of the death benefit. Additionally, the cash value does not decrease over time; instead, it generally increases as premiums are paid. Lastly, while the cash value can be used to pay premiums, it is not solely restricted to that purpose, making it accessible for loans or partial withdrawals as needed.