cash surrender value Definition | Business Dictionaries from AllBusiness.com
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Business Definition for: cash surrender value
cash surrender value

portion of life insurance premiums paid that can be received if the policy is canceled. The beneficiary has the option of canceling the policy. Cash surrender value is classified on the balance sheet under Investments. As the company pays premiums, part represents an expense and part applies to the cash surrender value. The difference between the premium paid and the increase in cash surrender value represents an expense.

Cash surrender value of life insurance applies to ordinary life and limited payment policies. Term insurance does not have a cash surrender value.

cash surrender value

in insurance, the amount the insurer will return to a policyholder on cancellation of the policy. Sometimes abbreviated CSVLI (cash surrender value of life insurance), it shows up as an asset on the balance sheet of a company that has life insurance on its principals, called key man insurance. Insurance companies make loans against the cash value of policies, often at a better-than-market rate.

cash surrender value

accumulated paid-in value of a life insurance policy that qualifies as collateral on a bank loan. Banks usually will advance amounts up to the cash surrender value of a life insurance policy, less the interest charged on the loan. Besides taking an assignment of the insurance policy, which transfers title to the policy to the lender, the lender usually will ask the borrower to sign a separate contract stating the lender's rights. Loans secured by life insurance are a commonly used way to obtain bank credit. The lender usually advances up to 90% of paid-up cash value, as of the most recent payment date. Cash value is determined from a schedule, which may be in the policy itself or from the insurance company issuing the policy. The paid-up value may be used as collateral for a bank loan, although bank rates are often higher than rates insurance companies charge for policy loans.

See also key man insurance
cash surrender value

money a policyowner is entitled to receive from an insurance company upon surrendering a life insurance policy with cash value. The sum is the cash value stated in the policy minus a surrender charge and any outstanding loans and interest thereon. Increases in cash surrender value are not taxable income . Cash value received upon surrender of a policy is also not taxable income.

cash surrender value

money the policyowner is entitled to receive from the insurance company upon surrendering a life insurance policy with cash value. The sum is the cash value stated in the policy minus a surrender charge and any outstanding loans and interest thereon.

Copyright © 2005, 2000, 1995, 1987 by Barron's Educational Series, Inc., Reprinted by arrangement with Publisher.
Copyright © 2006, 2003, 1998, 1995, 1991, 1987, 1985 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
Copyright c 2006, 2000, 1997, 1993, 1990 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
Copyright © 2007, 2000, 1997, 1987, by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.
Copyright © 2000, 1995, 1991, 1987 by Barron's Educational Series, Inc. Reprinted by arrangement with Publisher.

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