Surrender Value
What Does Surrender Value Mean?
The surrender value is the amount of money that a policyholder or annuity holder would receive from the insurance company if they voluntarily terminate the policy before its maturity date or before the insured event occurs.
It is also referred to as the cash surrender value or cash value.
Insuranceopedia Explains Surrender Value
Most permanent life insurance policies, such as whole life policies, include a savings component called cash value. This value accumulates over time in an account for the policyholder’s future use. It can be used as the surrender value if the policy is surrendered or terminated, as the loan value if the policyholder decides to take a policy loan, or as an automatic premium payment if the policyholder fails to pay the premium on time.
The size of the surrender value depends on the type of policy and how long it has been in force, which is one reason whole life insurance costs more than term insurance. Since only certain policies build up a cash value that can be cashed out, it helps to understand how term and permanent coverage differ before buying a policy.
