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The Cash Surrender Value (CSV) is a term used in an insurance policy. It refers to a sum of money that an insurance company has to pay you when the policy is surrendered before the maturity time.
In other words, Cash Surrender Value is essentially the amount of cash, which you (insured) withdraw and surrender your policy to the insurance company with a will to let it expire.
When you surrender the policy, you are losing the benefit of protection under the policy and will pay no further premiums into the policy. Also, your nominees don’t get any benefits in case of an incident.
Before you look at how CSV is calculated, it is important to understand its working.
When you avail the insurance, your premium is distributed in the following manner-
There are various factors considered while calculation, such as -
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In case, your policy is new and you cancel it, then you will probably get a little or no cash value. This is because your cash has not accumulated enough benefits and the insurance company is most likely to evaluate the surrender charge on any amount you receive. The amount of cash value you will receive will be less than the policy’s Face Value.