What is surrender value?

What is surrender value?

• A. The surrender value is the amount paid on early termination after surrender charges, and it is typically less than the accumulation value.
• B. The surrender value equals the total premiums paid.
• C. The surrender value is the guaranteed minimum death benefit.
• D. The surrender value is the current contract value unaffected by surrender charges.

Answer: (A)

Surrender value is the cash you can receive if you terminate the policy or annuity early, after surrender charges are deducted. These charges reduce the amount you get back, so the surrender value is typically less than the accumulation value—the value built up from premiums and investment returns before any charges. The total premiums paid aren’t what you receive at surrender, the guaranteed minimum death benefit is a separate feature, and the contract value is not protected from surrender charges—those charges directly affect what you can withdraw early. In short, surrender value is the net amount paid out on early termination after the charges.

Surrender value is the cash you can receive if you terminate the policy or annuity early, after surrender charges are deducted. These charges reduce the amount you get back, so the surrender value is typically less than the accumulation value—the value built up from premiums and investment returns before any charges. The total premiums paid aren’t what you receive at surrender, the guaranteed minimum death benefit is a separate feature, and the contract value is not protected from surrender charges—those charges directly affect what you can withdraw early. In short, surrender value is the net amount paid out on early termination after the charges.