What is "surrender value" in insurance terms?

Surrender value refers to the amount of cash that a policyholder can receive from an insurance policy if they decide to terminate or "surrender" the policy before it matures or before the insured event occurs, such as death in the case of life insurance. This value is typically associated with permanent life insurance policies, which accumulate cash value over time.

The surrender value represents a portion of the accumulated cash value, minus any fees or outstanding loans that may be owed against the policy. When a policyholder decides to surrender the policy, they receive this cash amount, which can then be used for other financial needs or investments. It's important for policyholders to understand that surrendering a policy could also mean losing insurance coverage and potential future benefits.

In contrast, the other options relate to different aspects of insurance. Penalties for early termination represent potential costs associated with surrendering the policy but do not define what surrender value specifically is. The amount paid upon the death of the insured pertains solely to the death benefit of a life insurance policy and is not reflective of any accumulated cash value or surrendering of the policy. Similarly, the cash value available after maturity would be applicable to policies that mature or reach their end date, rather than those that are surrendered early.