QS Study

Surrender Value

Surrender value the amount the policyholder will get from the life insurance company if he decides to exit the policy before maturity. The surrender value of a life insurance policy is the amount of money you receive if you decide that you no longer wish to continue with the policy. It is the amount the policyholder will get from the life insurance company if he decides to exit the policy before maturity.

It is an amount of money that you, as a life insurance policyholder, receive if you decide to terminate (surrender) your life insurance policy (e.g. whole life Insurance policy) before it matures or before you die. A mid-term surrender would result in the policyholder getting a sum of what has been allocated towards savings and the earnings thereon. From this will be deducted a surrender charge, which varies from policy to policy. As per a recent Insurance and Regulatory Development Authority (IRDA) directive, life insurance companies have been asked not to levy surrender charges if the policyholder chooses to terminate the cover after five years. It refers to the amount a life insurance contract is worth after any charges and fees from the insurance company if the contract is fully surrendered.

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