cash surrender value

Cash Surrender Value

The sum of money an insurance company will pay to the policyholder or annuity holder in the event his or her policy is voluntarily terminated before its maturity or the insured event occurs. This cash value is the savings component of most permanent life insurance policies, particularly whole life insurance policies. Also known as "cash value", "surrender value" and "policyholder's equity".

Notes:

Cash surrender value applies to the savings element of whole life insurance policies that are payable before death. However, during the early years of a whole life insurance policy, the savings portion brings very little return compared to the premiums paid.

See also: Annuity, Life Insurance, Term Life Insurance, Universal Life Insurance, Whole Life Insurance

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cash surrender value

The money paid by an insurance company to a policyholder who is canceling an annuity or cash-value life insurance policy. Cash value accumulates when premiums and interest on any previous cash value exceed the cost of insurance. Generally, the cash value a policyholder receives upon cancellation is not taxable unless it exceeds the sum of the premiums paid. Also called surrender value.