Which of the following describes whole life insurance?

Whole life insurance is characterized by its accumulation of cash value over time, which distinguishes it from other types of life insurance policies. This cash value grows at a guaranteed rate, providing a savings component that policyholders can borrow against or withdraw under certain conditions.

In contrast to term life insurance, which provides coverage for a specified period and does not build cash value, whole life policies ensure lifelong coverage as long as premiums are paid. The premiums for whole life insurance are typically higher than those for term insurance; however, part of these premiums goes toward the cash value accumulation.

The other answers do not accurately describe the nature of whole life insurance. For instance, the idea that it only lasts for a short period not only contradicts the fundamental aspect of whole life insurance but also leads to confusion with term insurance. The notion of having no premiums required also does not apply; premiums are an essential component of maintaining coverage, and being able to purchase it solely at a young age ignores the flexibility in age at which one can obtain a whole life policy.

Thus, the correct answer reflects the significant characteristic of whole life insurance: its ability to build cash value over time, providing both a death benefit and a savings feature for policyholders.