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Cash Surrender Value

   Also found in: Dictionary/thesaurus, Financial, Acronyms, Wikipedia 0.01 sec.

The amount of money that an insurance company pays the insured upon cancellation of a life insurance policy before death and which is a specific figure assigned to the policy at that particular time, reduced by a charge for administrative expenses.

The cash surrender value of an insurance policy is not based upon its actual value, but upon its reserve value—the face amount of the contract discounted at a specific rate of interest according to the insured's life expectancy. Not all life insurance policies have cash surrender values; the terms of the policy must so provide.



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NONFORFEITURE VALUE also called cash surrender value, is the sum of money an insurance company will pay a policyholder if he or she decides to cancel the policy before it expires or before he or she dies.
If this process is completed properly, the life insurance policy would typically earn significantly more in the open market than it would if returned to the insurance company for a cash surrender value.
Cash value accumulation test: A contract meets the cash value accumulation test if, by the terms of the contract, the cash surrender value of the contract may not at any time exceed the net single premium that would have to be paid at that time to fund future benefits under the contract.
 
 
 
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