Cash surrender value is the amount of money you would receive if you cancelled, or surrendered, your policy. It is the amount of savings earned in a permanent life insurance policy, minus any surrender charges. Surrender charges are generally only incurred during the first years of the policy. You can contact your agent or the company through which your policy was issued, to find out the surrender value of your policy.
Cash surrender value life insurance refers to the cash build up in a permanent life insurance plan and not available on term policies. Permanent policies are known by names of whole life, universal life, indexed universal life and variable life. The best way to locate your exact cash value in your policy is to find the illustrations page located about 10 to 12 pages in your policy. Look at the corresponding policy year you are in and the value is out beside. There is no partial value for partial years. Your cash value must be calculated by a full policy year. Most cash value plans have no value for the first 6 or 7 years due to all premiums paying up the death benefit or face amount.
The cash surrender value of a life insurance policy is the value you would receive before any taxes if you cashed in or surrendered the policy. Typically cash surrender value is generated in whole life and universal life policies. A build up of a cash reserve is necessary for level premium insurance to work.
In Canada, you can attract taxation if
1. You surrender a policy and the cash level exceeds the adjusted cost base of the policy,
2. Borrow and the amount borrowed exceeds the adjustment cost base of the policy
3. Transfer ownership (in most cases)
Alternatively, if you wanted to access the cash value you could borrow for a bank using the policy as collateral.
I suggest you contact a local insurance broker for assistance.
If you have further questions, or feel that I could be of assistance, please do not hesitate to contact me.
If you would like to work with a local life insurance broker, you could start with a Google search. For example, if you search for: life insurance broker Halifax or life insurance agent Halifax, my name, along with several others, will come up. You can use the same method to find a life insurance broker in your community.
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
A whole life policy provides a level death benefit and a level premium payment that extends to the death of the customer. Since the actual number of people who die in a year increases as they become older, the company charges a premium that provides for the death claims in the current year and in future years. This money that accumulates is known as guaranteed cash value. It is guaranteed in the policy. This is the surrender value of the policy. The company will give you the money it has accumulated and you no longer hold the company to the promise to pay the death benefit.
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In Canada, you can attract taxation if
1. You surrender a policy and the cash level exceeds the adjusted cost base of the policy,
2. Borrow and the amount borrowed exceeds the adjustment cost base of the policy
3. Transfer ownership (in most cases)
Alternatively, if you wanted to access the cash value you could borrow for a bank using the policy as collateral.
I suggest you contact a local insurance broker for assistance.
If you have further questions, or feel that I could be of assistance, please do not hesitate to contact me.
If you would like to work with a local life insurance broker, you could start with a Google search. For example, if you search for: life insurance broker Halifax or life insurance agent Halifax, my name, along with several others, will come up. You can use the same method to find a life insurance broker in your community.