What is the defining characteristic of Whole or Ordinary Life Insurance?

Whole or Ordinary Life Insurance is characterized by its combination of a death benefit and a savings component, which is often referred to as cash value. This type of insurance provides lifelong coverage as long as premiums are paid, ensuring that a death benefit will be paid out to the beneficiaries upon the policyholder's death. The savings account aspect allows policyholders to build cash value over time, which can be borrowed against or withdrawn under certain conditions.

This fundamental characteristic of combining a death benefit with a savings account sets Whole Life Insurance apart from other insurance types, such as term life insurance, which only provides temporary coverage without any cash value component. Additionally, other options that suggest flexible premiums or investments in mutual funds do not accurately represent Whole Life Insurance, which typically has fixed premiums and invests primarily in lower-risk instruments to ensure stable growth of cash value.