An insured owns a whole life policy that has accumulated cash value. Which of the following statements is true about the policy's cash value?

While the cash value does grow, it is not considered taxable income until it is withdrawn or the policy is surrendered. During the life of the policy, the cash value accumulates on a tax-deferred basis, which means the growth is not taxed annually.

The cash value of a whole life policy typically grows at a guaranteed rate set by the insurance company rather than fluctuating with the company's performance. While some policies may offer additional dividends based on company performance, the guaranteed cash value grows steadily regardless of fluctuations.

In a whole life policy, the cash value is indeed guaranteed to grow at a certain rate established by the insurer. This contrasts with other types of policies, such as variable life insurance, where cash value can vary based on investment performance. Whole life policies provide a stable growth component.