What is a notable characteristic of whole life insurance policies compared to term policies?

Whole life insurance policies are distinguished by the fact that they build cash value over time. This is a key feature that sets them apart from term life insurance policies, which typically provide coverage for a specified term but do not accumulate any cash value.

With whole life insurance, a portion of the premium paid goes into a savings component, allowing the policy to grow in value as it matures. This cash value can be accessed by the policyholder during their lifetime, offering benefits such as loans or withdrawals. Additionally, the cash value component can contribute to the overall death benefit upon the policyholder’s passing.

This structure makes whole life insurance not only a risk management tool but also a financial asset that can be leveraged, distinguishing it from term policies that focus solely on providing a death benefit without any savings or investment component.