What is typically true about the cash value of a whole life insurance policy?

The cash value of a whole life insurance policy is designed to grow over time, which is one of the cornerstone features that differentiates it from term life insurance. As the policyholder pays premiums, a portion of those premiums accumulates as cash value, which can be accessed by the policyholder through loans or withdrawals. This cash value builds at a guaranteed rate as stipulated in the policy, creating a savings component that can be beneficial over the life of the policy.

In contrast to the other options, which suggest scenarios that do not accurately reflect the mechanics of whole life insurance, this characteristic of the cash value being borrowable emphasizes the policy's dual function as both a death benefit and a means of savings. Therefore, the assertion that it grows over time and can be borrowed against is central to understanding how whole life insurance works.