To surrender a life insurance policy means to voluntarily terminate the policy before maturity. In other words, it is cashed in before the death of the Insured, or before the policy Owner reaches the age when they can collect the full face amount.
By surrendering the policy, the cash value may be received, minus any surrender charges, but the policy will be lost. Discuss all your options with an experienced life insurance agent before making the decision to surrender as there are other options that may be more favorable to you.
Surrendering a life insurance policy is an important decision and may have consequences, not only in losing valuable coverage, but potential tax ramifications. Surrendering a life insurance policy terminates the coverage for your beneficiaries or business partners. That exposure could have dire consequences if outstanding financial liabilities exist. And if the policy accumulated cash values beyond basis, the surrender of the policy will trigger an ordinary income tax event.
.JPG){kind=avatar}
By surrendering the policy, the cash value may be received, minus any surrender charges, but the policy will be lost. Discuss all your options with an experienced life insurance agent before making the decision to surrender as there are other options that may be more favorable to you.