What Does Surrender Mean?
Surrender is the term used when a policyholder officially cancels the policy that they bought from an insurance company. This is usually done by notifying the company and signing documents that strip the person of future benefits.
Insuranceopedia Explains Surrender
When someone wants to cancel their policy, they contact their insurer about it. They might then be sent a surrender form that they have to fill out and mail back to the company. If there is no surrender form, the policyholder can write the company a letter instructing it to cancel the policy. Often, the company will ask the policyholder to provide a bank account number so that the company can deposit the cash value of the policy prior to its maturity.
Over time, a policy accumulates cash value. Getting that amount instead of the future benefits is one of the reasons some people choose to cancel their policy. They might, for instance, have encountered a financial problem that they can solve by cancelling the policy and monetizing it.