In whole life insurance, how do premiums behave and what benefits accumulate?

• A. Premiums increase with age; there is no cash value.
• B. Premiums remain level for life, and cash value accumulates.
• C. Premiums are paid only for the first 20 years.
• D. Premiums are paid as a percentage of loan balance.

Answer: (B)

In whole life insurance, premiums stay level for life. The amount you pay is fixed and does not increase as you age. A portion of each premium goes into a cash value component, which accumulates over time. This cash value grows over the years (often with a guaranteed minimum return and sometimes with possible dividends if the policy is participating), and you can access it later through loans or withdrawals. The death benefit typically remains in force for the life of the insured as long as premiums are paid, while the cash value builds as a living benefit.