Cash Surrender Value is sometimes referred to as a surrender value or a cash value. It is the cash amount that can be realized in the event that an insurance policy is cancelled. It most often involves a whole life insurance policy that does not reach maturity for some reasons. Any cash value that is inbuilt in the coverage at the time of the cancellation of an insurance policy will result in a cash payment to the insured party.

One of the most attractive aspects of insurance policies is the ability to increase cash value over time. Generally, the cash value will continue to increase the longer that the policy is in effect. As the policy’s value grows, it is often possible to borrow against this cash value or even use the policy as collateral to secure a loan.

Utilizing the whole life policy as collateral to secure a loan usually makes note of the current cash surrender value of the policy. Essentially, the lender will use this figure as the redeemable worth of the asset. By employing the cash surrender value as the collateral for the loan, the lender is assured of recovering the value of the loan, even if the debtor defaults for some reason. The debtor, in turn, does not have to combine other assets that he or she could part with if financial necessity required the sale of some property or other investments.

Cash surrender value should never be confused with the face value of any life insurance coverage. This face value of the policy has to do with the amount that will be paid out to beneficiaries as long as the terms of the policy are met. Cash surrender value is payable to the insured at the time that a decision to cancel insurance policy coverage is made, and will be significantly less than the face value.