Which statement accurately describes the cash value of a Whole Life policy?

The statement that the cash value of a Whole Life policy builds tax-deferred is accurate because one of the primary benefits of Whole Life insurance is that the cash value component accumulates interest over time without being subject to income tax as it grows. This tax-deferred growth allows the policyholder to build savings within the policy, which can be accessed later without an immediate tax consequence.

The cash value is a significant aspect of Whole Life policies, making them appealing to those who want both insurance protection and a savings component. The tax advantages enhance the policy’s effectiveness as a long-term savings tool.

In contrast, the other statements do not accurately describe the cash value of a Whole Life policy. For instance, while it is true that the cash value typically does not decline and is guaranteed to grow (given the policy is active), the tax-deferred accumulation distinctly sets it apart as a key feature. This accumulation continues until the policyholder decides to access it or the policy matures.