Whole life insurance is characterized by which of the following?

Whole life insurance is characterized by which of the following?

• A. A policy that ends after a set period
• B. It includes a cash value component
• C. It has lower premiums than term life insurance
• D. It only covers accidental death

Answer: (B)

Whole life insurance is characterized by its inclusion of a cash value component, which is one of its defining features. This cash value accumulates over time as the policyholder pays premiums, providing a savings element that can be borrowed against or withdrawn during the life of the policyholder. Additionally, whole life insurance offers lifelong coverage, as opposed to a policy that would end after a set period. The premiums for whole life insurance are typically higher than those for term life insurance because they provide lifelong coverage and the cash value feature. Lastly, whole life insurance provides comprehensive coverage that is not limited to accidental death alone but includes death benefits due to any cause as long as the policy is in force. Therefore, the characteristic of having a cash value component is fundamental to understanding what whole life insurance is.

Whole life insurance is characterized by its inclusion of a cash value component, which is one of its defining features. This cash value accumulates over time as the policyholder pays premiums, providing a savings element that can be borrowed against or withdrawn during the life of the policyholder. Additionally, whole life insurance offers lifelong coverage, as opposed to a policy that would end after a set period. The premiums for whole life insurance are typically higher than those for term life insurance because they provide lifelong coverage and the cash value feature. Lastly, whole life insurance provides comprehensive coverage that is not limited to accidental death alone but includes death benefits due to any cause as long as the policy is in force. Therefore, the characteristic of having a cash value component is fundamental to understanding what whole life insurance is.