What Is The Surrender Value Of A Life Insurance Policy?
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63333 POINTSview profilePeggy MaceMost of the U.S.The surrender value of a life insurance policy is the amount that the policy owner will receive in cash if they decide to surrender, or cash in, their policy before maturity. It is the amount of cash value in the policy, minus any surrender charges, if there are any surrender charges.Answered on June 17, 2013flag this answer
37376 POINTSview profileDavid G. Pipes, CLU®, RICP®Business Development Officer, T.D. McNeil Insurance Services, Fresno, CaliforniaOnly permanent life insurance policies have a surrender value. The feature of permanent policies that allows this is that more premium is collected than necessary to purchase insurance for one year. The remainder becomes a reserve. That reserve reduces the company’s need to purchase insurance in later years. The government does not tax the reserve except under unusual conditions. The company guarantees that reserve in the whole life policy. At any time the company will exchange the reserve for the promise to pay the death benefit. They will also allow you to reduce the death benefit and take a loan. There are other options but they are all based on the surrender value. The surrender value is the reserve.Answered on May 13, 2014flag this answer
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