What characterizes whole life insurance?

Whole life insurance is characterized by its provision of lifelong coverage, which means that as long as premiums are paid, the policy remains active until the insured's death. This type of insurance also includes a savings component, known as cash value, which accumulates over time on a tax-deferred basis. The cash value can be borrowed against or withdrawn, making whole life insurance not only a death benefit but also a potential source of savings or borrowed funds during the policyholder’s lifetime.

This combination of lifelong coverage and a savings element distinguishes whole life policies from other types of insurance, such as term policies, which provide only temporary coverage for a fixed period without any savings component.