What is cash surrender?

What is cash surrender?

• A. A withdrawal of cash value and surrender of the policy.
• B. A temporary suspension of premium payments.
• C. A dividend payout to the policyowner.
• D. A policy loan against the cash value.

Answer: (D)

Cash surrender value is the amount you receive when you terminate a cash-value life insurance policy. It’s the policy’s accumulated cash value minus any surrender charges and any outstanding loans or premiums due. When you surrender, the policy ends and you get that cash amount. A loan against the cash value is different: you’re borrowing money still tied to the policy and keeping the policy in force, not surrendering it. Similarly, a temporary suspension of premium payments and a dividend payout are not the surrender of the policy for its cash value. So the concept describes receiving the cash value upon surrender of the policy.

Cash surrender value is the amount you receive when you terminate a cash-value life insurance policy. It’s the policy’s accumulated cash value minus any surrender charges and any outstanding loans or premiums due. When you surrender, the policy ends and you get that cash amount. A loan against the cash value is different: you’re borrowing money still tied to the policy and keeping the policy in force, not surrendering it. Similarly, a temporary suspension of premium payments and a dividend payout are not the surrender of the policy for its cash value. So the concept describes receiving the cash value upon surrender of the policy.