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what is surrender value of a life insurance policy

Discussion in 'Life insurance' started by real_buzz, Dec 17, 2012.

  1. real_buzz Moderator

    Surrender value or cash value is the amount paid to the policy holder when a life insurance policy/contract is terminated. Surrender value is paid in the case of premature termination of the life insurance policies.

    The amount is calculated by the life insurance company. Generally the policy should be inforce for a minimum number of years in order to be eligible for surrender. So if a policy is terminated before that minimum number of years, surrender value wonā€™t be paid to you.

    So always verify the minimum number of years to be eligible for surrender value of your policy. Surrender value will also vary from policy to policy. For example, it could be

    70 % of premium paid ā€“ surrender charges after 3 year
    80 % of premium paid - surrender charges after 4 year
    100 % of premium paid - surrender charges after 5 year

    Note ā€“ it will vary from plan to plan so better check your policy document to know the rules related to surrender value.

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