What does 'whole life insurance' guarantee?

Whole life insurance guarantees both the payment of a death benefit and the accumulation of cash value over time. This type of insurance is designed to last the entire lifetime of the policyholder, as long as premiums are paid. The death benefit is the amount that will be paid to the beneficiaries upon the policyholder's death, providing financial security to loved ones.

Additionally, whole life insurance policies build cash value, which is a savings component that grows at a guaranteed rate over time. This cash value can be borrowed against or withdrawn if needed, adding a layer of versatility to the policy. This combination of lifelong coverage, a guaranteed death benefit, and cash value accumulation distinguishes whole life insurance from other types of life insurance products that may offer temporary coverage or no cash value component.

In contrast, the other options do not encapsulate the full features of whole life insurance. For example, coverage until a certain age refers to term life insurance, while fixed payments without a cash value component typically describe term or certain types of disability insurance. Lastly, payment of benefits only in case of an accident aligns with accidental death and dismemberment policies, not whole life coverage.