The whole life insurance policy cash value, or surrender value, is the dollar amount of the cash on the policy that is payable should the policy be cancelled. In most instances it’s going to be a whole life insurance policy that hasn’t reached maturity for whatever reason. A payment will be made to the policyholder at the time of cancellation for any of the cash value inherent to the policy at that time.

The ability for a policy to accrue cash value is one of the most attractive aspects of any type of insurance policy. The longer the policy is in effect the longer the more opportunity the policy has the ability to accrue cash value.

As the value of the policy begins to grow comes the possibility of being able to borrow against the cash value of the policy or to possibly use the policy as guarantee in order to secure a loan. When you use the whole life insurance policy in order to secure a loan it will make note of the current surrender value of the policy. Basically, the lender is going to use the amount of a redeemable worth of the asset. When you do this it assures the lender of being able to recoup the loans value should the loan be defaulted.

The important thing to keep in mind is a cash surrender value is not the same as the face value of any life insurance policies coverage. The face value of a life insurance policy is the payout amount should the insured die and the terms of the policy have been met, meaning paid to current and premiums paid on time. If you surrender the policy it’s going to be considerably less than the face value of the policy; however, it’s a good option to have should you need to take advantage of it.