Cash Surrender Value

What is Cash Surrender Value?

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.

How does Cash Surrender Value Works?

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-

• A part is used to pay various fees and costs of the policy
• Some of the money goes to pay the death benefit protection
• And the remaining amount goes as an investment that earns returns and acts as accumulated benefits

Calculate Cash Surrender Value

There are various factors considered while calculation, such as -

• The existing period of the policy or the total amount of premium that you paid
• Capital gains, dividends or the amount of interest that are earned by the cash value in the policy
• The amount of cash surrender fees and charges that the insurance company will evaluate in order to liquidate the policy. These charges can remain in effect as long as 10 to 15 years. Once this period has passed the policy's cash will be equal to the surrender value

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.