Connecticut Life & Health Insurance Practice Exam 2026 – Complete Prep Guide

Whole life insurance is characterized by its ability to accumulate cash value over time as part of the policy. This cash value grows at a guaranteed rate, serving as a savings component that policyholders can borrow against or withdraw in the future. This feature distinguishes whole life insurance from term life insurance, which does not accumulate cash value and provides coverage only for a specified period. The policies are designed for the duration of the insured's life, as long as premiums are paid, rather than for a temporary period, which is another key trait of whole life coverage. Annual premium payments are generally required for whole life policies, but they can also be structured as single premium or limited payment plans. Thus, the accumulation of cash value is central to understanding why it is a defining characteristic of whole life insurance.