What is Cash Surrender Value?

By | March 15, 2011

The cash surrender value is the amount of cash a policyholder gets from the life insurance company if he/she actually surrender/cancel a life insurance policy before its maturity or becomes payable by death . This amount is net of any surrender charges and outstanding policy loans and interest thereon.

The cash value of the policy builds up with time. It continues to increase as long as the policy exists.

The other feature is that as the value of the policy grows, it is possible to borrow or take loan on the cash value or take a loan keeping the policy as collateral to obtain a secured loan. So having a policy could help you take up a personal loan, or mortgage loan by either keeping the policy as collateral or by the surrender cash value of the policy.

Cash surrender value is never the face value of any life insurance coverage. The face value of the policy is the amount that will be paid out to beneficiaries if the terms and conditions of the policy are met. Cash surrender value is payable to the insured at the time of cancelling insurance policy coverage is done. This will be considerably less than the face value.

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About Pradeep Yuvaraj

Pradeep Yuvaraj is a Co-Founder and Director at Finerva Financial Solutions Private Limited, a financial education company focused on personal finance education. He has penned over 250 articles relating to Personal Finance and clocked over 500 hours of educating individuals on managing personal finance. He is a serial entrepreneur and has been associated with 7 Start-ups. His entrepreneurial experience spans industries as varied as Education, Gas Engineering, Automobile Design, Software development and more recently a Pure play presentation design company. Prior to turning entrepreneur in 2005, he has worked for 3 of the top ten companies of the world - Shell, ExxonMobil and Total SA. This experience included handling Branch Operations, Channel Sales and Business Development across 5 states over a period of 8 years. He holds an MBA from Symbiosis and an Electronics Engineering Degree from the University of Pune.

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