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What is Cash Surrender Value?

Malcolm Tatum
Updated Feb 19, 2024
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Sometimes referred to as a surrender value or a cash value, the cash surrender value is the amount of cash that can be realized in the event that an insurance policy is canceled. This most often involves a whole life policy that does not reach maturity for some reason. Any cash value that is inherent in the coverage at the time of the cancellation of an insurance policy will result in a cash payment to the insured party.

One of the attractive aspects of many types of insurance policies is the ability to accrue cash value over time. Generally the cash value will continue to increase the longer that the policy is in effect. As the value of the policy grows, it is often possible to borrow against this cash value or even use the policy as collateral to secure a loan.

Utilizing the whole life policy as an asset to secure a loan usually makes note of the current cash surrender value of the policy. Essentially, the lender will use this figure as the redeemable worth of the asset. By employing this value as the collateral for the loan, the lender is assured of recouping the value of the loan, even if the debtor defaults for some reason. The debtor, in turn, does not have to bind other assets that he or she could part with if financial necessity required the sale of some property or other investments.

Cash surrender value should never be confused with the face value of any life insurance coverage. The face value of the policy has to do with the amount that will be paid out to beneficiaries as long as the terms of the policy are met. Cash surrender value is payable to the insured at the time that a decision to cancel insurance policy coverage is made, and will be significantly less than the face value.

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Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including WiseGeek, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.
Discussion Comments
By anon272731 — On Jun 03, 2012

I wanted to know how to calculate the surrender value.

By anon226318 — On Oct 31, 2011

Is there cash surrender value for service member group life insurance (sgli) for the military ?

By anon130766 — On Nov 29, 2010

I have a policy on my 30 year old daughter. If I were to surrender this policy would I be able to collect the policy amount as I paid the premiums since the beginning?

By anon91658 — On Jun 23, 2010

Is the actual cash value of an insurance policy based on the accumulation of premium payments?

By anon72122 — On Mar 21, 2010

How can a policy holder of life insurance can get his deposited money back before maturity from his policy? When is he not eligible to get his money deposited in policy back?

By anon37885 — On Jul 22, 2009

My late grandmother had a 100,000 policy on me for the past 15 years. How much do you think I'll get in cash surrender value?

By anon27788 — On Mar 05, 2009

We have $1364.00 in gross cash surrender value with a $100,000.00 policy. What happens to our $100,00.00 policy if we take out the $1364.00?

By anon25264 — On Jan 26, 2009

What is supplemental life insurance and does it have a cash value?

By aroclock — On Nov 02, 2008

Have A 100,000 Whole Life Policy With $71,0000 In Cash Value. Over The Past 16 Years Premiums are Being Paid Under A Disability Clause. I Just Turned 72 Years Old & Was Wondering If I Should Cancel It & Do Repairs Around The Home. It Pays Me A Yearly Cash Dividend Of $1,350.00. I Have About $400,000 Of Additional Insurance.

By anon18932 — On Oct 02, 2008

Must the annual increase in the cash surrender value of a life insurance policy be included in gross income? Does this increase reduce the deduction for life insurance expense in any way?

Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
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