What characterizes a "whole life insurance" policy?

Whole life insurance is characterized as a permanent policy that includes a cash value component. This type of insurance is designed to provide coverage for the entirety of the policyholder's life, assuming that premiums are paid as required. One of the defining features is that it builds cash value over time, which can be borrowed against or withdrawn by the policyholder under certain conditions. This cash value grows at a guaranteed rate, offering an element of savings in addition to the death benefit.

In contrast, other options describe different insurance products or characteristics. A temporary coverage plan for a specific term refers to term life insurance, which provides protection for a set period without cash value. A type of insurance that only covers accidents pertains to accident insurance, focused solely on injuries resulting from accidental events rather than providing comprehensive life coverage. A plan that does not require any premium payments does not accurately reflect the nature of whole life insurance, as premiums are a fundamental part of maintaining the policy and benefiting from its cash value and death benefit features.