Cash surrender value is the amount a policyowner is entitled to receive if they voluntarily terminate a permanent life insurance or certain annuity contracts before maturity or death, after deduction of any applicable surrender charges or policy loans. It represents the net accessible cash value built up from premiums, credited interest, dividends, and policy adjustments. Cash surrender value can fluctuate with investment performance, policy charges, and withdrawals. Surrendering a policy may trigger income tax on gains and forfeits future death benefits, so it is usually considered when coverage is no longer needed, costs are unsustainable, or a 1035 exchange to another contract is being evaluated.

Advisors review cash surrender values during policy reviews, especially when clients are considering lapsing, reducing, or exchanging contracts. They compare surrender values to basis to estimate taxable gains and model alternatives such as reduced paid-up insurance, partial surrenders, or 1035 exchanges into annuities or new policies. Underwriters and carriers disclose current and projected cash surrender values on in-force illustrations. Advisors emphasize that surrendering solely for short-term cash can undermine long-term planning goals. Understanding cash surrender value helps advisors guide clients through exit or restructuring decisions while managing tax and protection tradeoffs.