Insurance Dictionary

cash surrender value

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Insurance Dictionary -> cash surrender value

In the insurance industry, the term Cash Surrender Value (often just called surrender value or cash value) refers to the amount of money the person taking out the insurance policy receives, if they cancel the policy before it reaches maturity, or before they meet the requirements of the insured event; such as death (in a life insurance policy), injury or something similar.

The general process of insurance is for the policyholder to pay a set monthly amount in to the policy until it reaches a predetermined maturity date (it can then be paid out), or if a predetermined requirement or event is met, such as becoming injured and unable to work. Some policies arenít strict on when the policy can be cashed out (even before the maturity date or if a requirement is met), whereas others will not pay out the money until the contractual agreement is fulfilled. However, when cashing out an insurance policy early, the Cash Surrender Value will not bring in any great return, compared to the premiums associated with serving the full term. This is the risk involved with breaking the original agreement.

Cash surrender value applies to the cashing out of all sorts of different insurance policies, although the most common is with permanent life insurance policies that can be paid out before death.

There is no particular reason why people cash out their policies early, and are often just individual cases related to the need for extra finance.





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