Which of the following is a characteristic of life insurance?

Life insurance is designed to provide financial protection to the beneficiaries of the insured in the event of their death. One of the key characteristics of life insurance is that it can have tax implications for beneficiaries. Generally, the death benefit paid out to beneficiaries is not considered taxable income, which provides a financial advantage. Additionally, the cash value accumulated in certain types of life insurance policies, such as whole life insurance, may also come with different tax treatments. Thus, understanding these tax implications is crucial for policyholders and beneficiaries alike, as it can significantly affect the overall financial planning and inheritance strategies.

The other choices do not accurately depict essential characteristics of life insurance. While some policies may not require annual physical exams, many do allow individuals to obtain coverage without these conditions. Life insurance can cover a wide range of circumstances, including accidental deaths, not just natural ones, and it can indeed offer cash value in specific policy types, contradicting the notion that it typically does not offer any cash value.