What is one common characteristic of whole life insurance?

Whole life insurance is distinctive because it serves not only as a death benefit but also as a financial asset. One of its primary features is the accumulation of cash value over time. As policyholders pay their premiums, a portion of that premium goes into a savings component, which builds cash value at a guaranteed rate. This cash value can be borrowed against, withdrawn, or used to pay premiums later in life.

The other options highlight aspects that do not align with the characteristics of whole life insurance. For instance, limiting coverage until age 65 is a feature more commonly associated with term life insurance. Whole life insurance provides lifelong coverage, as long as premiums are paid. The notion that whole life insurance has a lower premium than term life is inaccurate; typically, whole life premiums are higher due to the cash value component and the lifelong coverage it offers. Lastly, the requirement for annual renewal pertains to term life, which often requires renewal after the term ends, while whole life remains in force as long as premiums continue to be paid without the need for renewal.