What is Cash Surrender Value Life Insurance?

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Contributor, Benzinga
February 15, 2022

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The nuances of life insurance policies go well beyond deciding between term life and whole life insurance policies. Having a better understanding of cash surrender value can help increase your financial security.  

A cash-value policy such as a whole life or variable life policy gives you flexibility in a variety of useful ways. Surrendering your policy for cash is one way to help you reach your financial goals. 

Benzinga explains what cash surrender value means and outlines sensible reasons for surrendering your life insurance policy. 

What is the Cash Surrender Value of Your Policy?

The cash surrender value of a policy is the cash amount a policyholder receives when they cancel their life insurance policy or annuity. 

Permanent life insurance policies such as whole life, variable life and universal life insurance accumulate cash value. Certain types of annuities also have cash values. On the other hand, term life insurance policies do not accumulate cash value. 

Life insurance becomes less complicated when you have a good understanding of common terms such as death benefit, cash value and cash surrender value. 

The death benefit, also known as the face amount, is the amount payable to a beneficiary of a life insurance policy. 

Cash value, also known as the account value, is a sum of money that accumulates in addition to the death benefit. The insurance provider takes some of the money policyholders pay through their premiums and puts it toward investments. It then credits the policy based on how well the investments perform. 

Surrender value, which is called annuity surrender value since it pertains to an annuity, is equal to the cash value of the policy minus any cash surrender fees

Surrender policies vary based on the type of policy. With some policies, to cash out life insurance, the policyholder would have to cancel the policy, which means surrendering the policy completely.

Why Surrender Your Policy for Cash? 

Life sometimes takes unexpected twists and turns, and when those times create a financial hardship, you might consider cashing out your life insurance

As you get older and accumulate more wealth, you may decide you no longer need one or more of your life insurance policies. If that is the case, you could acquire the cash surrender value of your life insurance policy and no longer have to pay the premiums, which would save you even more.   

It is acceptable to take out a loan against your cash-value policy and pay it back. The interest will likely be lower than what you can get elsewhere, and it is convenient and easy to borrow your own money without having to undergo a credit check or adhere to strict payback requirements. 

Other situations exist where it might make sense to tap into your cash surrender value. 

Retirement: If you don’t withdraw the cash value before you retire, it can work to your benefit in a couple of ways. 

One option is to leave it as is. When you pass away, your beneficiaries will receive the death benefit and the cash value amounts, which will allow you to leave your loved ones a nice legacy.

If you are living on a fixed income during retirement and are having trouble keeping up with your bills, you could also use the cash value to pay your premiums so you do not have to surrender the policy altogether. 

A cash-value policy can be used as a supplement to a qualified retirement plan, such as an IRA or 401(k) plan.  

A new business: Whole life insurance is typically purchased for the death benefit, but the cash value aspect of it can also be used to finance business ventures. For example, if you were starting a new business, you may be able to borrow against the cash value to fund your startup costs. Alternatively, you could use your cash value as collateral to acquire a small business loan. 

Businesses have good years and bad years, and sometimes you need additional cash to keep your business running. COVID-19 is a prime example of how your business could be unexpectedly interrupted. Thus, the cash surrender value of your life insurance policy could help you keep your business viable during harsh economic downturns. 

Your business partner or family members could also use the cash value of your policy to pay key employees if you die.

Travel: If you want to travel now or during retirement, you may need extra cash to ensure you have a memorable time. 

You could take the cash surrender value to fund your first big vacation to launch your retirement. Whatever travel plans you have, the cash value could be used to upgrade your trip to first-class airfare, get a penthouse hotel room or enjoy special excursions and activities.  

Supporting children or grandchildren: While things might be going well for you, your children or grandchildren may need financial help. They might lose a job or face a serious medical issue. By taking a loan out on your cash surrender value, you could reduce their financial burdens.

You might also opt to use your cash value to support your children or grandchildren when it comes to tuition for private schools or colleges. 

Purchasing other insurance policies: Sometimes one life insurance policy is not enough. You could consider taking out just enough cash value from your cash-value policy to pay the premiums on other life insurance policies, which would lower your regular budget costs. 

Can You Surrender a Portion of the Policy’s Cash Value? 

The simple answer is yes, you can surrender a portion of your policy’s cash value without surrendering the policy completely. However, it is important to consider how surrendering a portion of the cash value will impact your policy overall. 

For example, if you take out a loan against your policy and don’t pay it back, or you die before you have an opportunity to pay it back, it will decrease the amount of your death benefit accordingly. Every time you pull cash from it, your policy loses value.

Furthermore, life insurance companies can charge surrender fees, and you could be penalized if you surrender your policy early, which will leave you with less money overall. 

While you can surrender all or part of a cash value policy, it is not always the best choice.

Compare Permanent Life Insurance Companies

When considering your options for purchasing a life insurance policy that contains a cash surrender value provision, it can be confusing to know where to start. 

Benzinga eases the process by offering insights and reviews on some of the best life insurance companies that offer cash-out life insurance. 

To get you started,here are reviews of some of the top life insurance providers to consider. 


Policygenius is not a provider of life insurance policies, but its online platform makes it easy to compare some of the top insurance providers in the industry. Policygenius takes you through your life insurance application step-by-step to ensure all companies have the information they need to provide you with an accurate quote. 

If you are looking for a trusted, financially strong life insurance company that offers competitive rates, you are sure to find what you are looking for at Policygenius.

Policygenius also offers a convenient Insurance Check-Up Tool to give you a blueprint of your life insurance needs. The tool accounts for life insurance policies you already have in force. 


Sproutt is also not a direct provider of life insurance. Sproutt is a marketplace that matches people looking for life insurance with a policy that best matches their needs. The company partners with at least a dozen top-rated life insurance companies, so it can find a policy to suit almost everyone.

Sproutt will guide you to the right insurance policy for your needs, and the platform works especially well for people in the 30- to 45-year-old range who are generally healthy.  

Its online platform is easy to navigate for people looking for term life insurance. Those who prefer a whole life or universal life insurance policy can get quotes over the phone. 


Quotacy is another life insurance quoting platform where you can get multiple quotes on life insurance at one time. The platform enables you to get quotes from life insurance companies in every state. One of the benefits of Quotacy is it merges directly with the platforms of life insurance companies. Once you receive your quotes, you can move to apply for the policy of your choice immediately and seamlessly. 

The platform only accommodates term life insurance quotes online, but customers who are interested in whole life insurance can get a quote by phone. 

  • securely through Quotacy Term Life Insurance's website
    securely through Quotacy Term Life Insurance's website
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    Comparing term life insurance policies

Pacific Life Insurance

Pacific Life Insurance sells term and whole life insurance products as well as annuities, long-term care and other investment products. Similar to other online life insurance platforms, interested customers must speak with a licensed insurance agent by phone to get a quote for cash value policies. With the exception of New York, customers can get quotes in all states. 

The life insurance policy you choose can last for a predetermined number of years or your lifetime. Whole life and universal life insurance policies are considered permanent life insurance policies that are intended to be in force until you die. 

However, life occasionally changes in ways that create unanticipated financial hardships. A life insurance policy that enables you to withdraw your own money as needed by tapping into the cash surrender value can serve your financial needs at various times of your life. You may experience times when you will be glad you have that flexibility.

Frequently Asked Questions


How do you calculate cash surrender value?


It is relatively easy to calculate the cash surrender value of a life insurance policy. Look at your statement for the total cash value and subtract any surrender fees the company may charge you.  

Be aware that if you choose to cash out your life insurance policy early in the life of the policy, the surrender fees could be more than the cash value that accumulated. 


Is surrender value the same as cash value?


Cash value and surrender value may sound alike, but they are not synonymous. Cash value pertains to the amount of cash your life insurance policy has accumulated over time, in addition to your death benefit. By contrast, surrender value accounts for the built-up cash value after you subtract the surrender fees.


Benzinga crafted a specific methodology to rank life insurance. To see a comprehensive breakdown of our methodology, please visit our Life Insurance Methodology page.