Which statement accurately describes a whole life policy?

A whole life policy is designed to provide lifelong coverage and includes a savings component known as cash value. This cash value accumulates over time, allowing policyholders to borrow against it if needed. This feature creates a dual benefit: the death benefit protection and the ability to access funds during the insured's lifetime.

The option stating that cash value may be borrowed against accurately describes a key characteristic of whole life insurance, emphasizing its value beyond just death benefits. Policyholders can leverage this cash value for loans or withdrawals, providing financial flexibility.

The other options do not capture the fundamental aspects of a whole life policy. Whole life insurance does accumulate cash value, not the opposite, and it does not provide solely term coverage since it guarantees coverage for the lifetime of the insured. Additionally, while life insurance is risk-based in terms of underwriting, the statement that it is only risk-based does not fully encompass the savings features of whole life policies.