Sat. Nov 27th, 2021

Life Insurance Cash Surrender Value s the total amount an insurance company pays to policyholders in the event their policy is voluntarily terminated before maturity or before the insured event occurs.

Giá trị giải ước (Cash Surrender Value) là gì? Đặc điểm của giá trị giải ước

What Is Life Insurance Cash Surrender Value?

The surrender value or surrender value in cash .

The discharge value is the total amount an insurance company pays to the policyholder or annuity policyholder in the event that their policy is voluntarily terminated prior to maturity or before the event is terminated. insurance occurs.

This type of cash value is the savings vehicle of most permanent life policies, especially whole life policies. It is also known as “cash value”, “surrender value”.

The salvage value of life insurance accrues according to a table in the policy. This table shows that premiums in the early years are higher than the pure premiums for the same period. If an policy is cancelled, the policyholder will receive the discharge value and the policy terminates. This is why a discharge policy is considered a savings or investment vehicle.

Characteristics of the discharge value

The discharge value is the cumulative portion of the permanent life insurance policy’s cash value available to the policyholder upon abandonment of the policy. Depending on the length of the contract, the settlement value may be less than  the actual cash value .

During the first years of the policy, the life insurance company may deduct the premium when the money value is returned. Depending on the type of contract, cash value is available to the policyholder over the lifetime. It is important to note that giving up a portion of the cash value will reduce the death benefit benefit.

In most life insurance plans, cash value is guaranteed, but it can only be waived when the policy is cancelled. Policyholders can borrow or withdraw a portion of the cash value for current use. Cash surrender value business term speech bubble illustration. Speech  bubble dialog illustration of business term saying cash | CanStock

The cash value of the contract can be used as collateral for low-interest contract loans. If not repaid, the policy’s death benefit will be reduced by the outstanding loan amount. Loans are tax-free unless this contract is waived, which makes outstanding debts taxable to the extent of the representative cash value balance.

In either case, a sufficient cash value must be in the policy to support the death benefit. With whole life insurance plans, loans are not considered a cash settlement, so the cash value level is not affected. With universal life insurance policies, cash value is not guaranteed. If cash value growth falls to the minimum required to maintain a death benefit, the policyholder is required to pay the policy in full to prevent the policy from lapses.