Cash Surrender Value

Last updated: March 29, 2016

The Basics of Cash Value and Surrender Charges

Cash surrender value is the amount available when you cancel or “surrender” a whole life policy.

In many cases, whole life policies begin to accumulate cash value at the end of the second or third policy year.

  • This depends on the issue age of the insured. As well as the actual amount available.

    • It may be reduced by the surrender charges.

      • This means there may be little or no cash value if you surrender your policy in the early years.

  • The cash value for a whole life, universal, or variable life policy comes from the excess premium paid in the policy’s early years.

    • The company invests the excess to provide the basis for the equity or cash value in your policy.

    • These policies have tables that show the amount of guaranteed cash value.

    • If you have a universal life policy, the insurance company must furnish an annual report that includes the cash surrender value and other pertinent policy information.

Before you surrender your policy for cash, carefully consider the loss of valuable insurance protection you may not be able to get later.

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