What Is Cash Surrender Value in Life Insurance?
The cash surrender value of a life insurance policy is the amount of money you receive if you decide to terminate, or “surrender,” your policy before it matures or before the insured person passes away.
This value is available only in permanent life insurance policies, such as:
- Whole life insurance
- Universal life insurance
- Variable life insurance
- Indexed universal life
Term life insurance does not have a surrender value because it does not build cash value over time.
What Does Surrender Value Mean in Life Insurance?
In simple terms, the surrender value is your policy’s built-up cash value minus any fees, penalties, or loans owed. It represents the amount your insurer will pay you if you cancel the policy voluntarily.
It’s essentially a way of “cashing out” your policy—but whether it’s your best option depends on several factors.
How to Calculate Cash Surrender Value of Life Insurance
The calculation for your life insurance cash surrender value varies by policy type and insurer, but the general formula is:
