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A configured tunnel is a point-to-point interface. The tunnel enables one IP packet to be encapsulated within another IP packet. A correctly configured tunnel requires both a tunnel source and a tunnel destination. For more information, see How to Create and Configure an IP Tunnel.
A tunnel creates an apparent physical interface to IP. The physical link's integrity depends on the underlying security protocols. If you set up the security associations (SAs) securely, then you can trust the tunnel. Packets that exit the tunnel must have originated from the peer that was specified in the tunnel destination. If this trust exists, you can use per-interface IP forwarding to create a virtual private network (VPN).
You can add IPsec protections to a VPN. IPsec secures the connection. For example, an organization that uses VPN technology to connect offices with separate networks can add IPsec to secure the traffic between the two offices.
The following figure illustrates how two offices form a VPN with IPsec deployed on their network systems.
Figure 14-7 Virtual Private Network
For a detailed example of the setup procedure, see How to Protect a VPN With IPsec in Tunnel Mode.