provision that the equity of an insured in a life insurance policy cannot be forfeited. There are four benefits a policyholder can select under the option: cash surrender value, extended term insurance, loan value, and paid-up insurance. If none is elected, a clause in the policy will stipulate the option that automatically goes into effect, usually extended term insurance.

value in life insurance policies that entitle the insured to these choices:

(1) to relinquish the policy for its cash surrender value. (Note that in the beginning years the cash value may be minimal because of expenses such as agent's commission, premium tax, and the cost of putting the policy on the insurance company's books.)

(2) to take reduced paid-up insuranceinstead of the cash surrender value.

(3) to take extended term insurance for the full face amount instead of the cash surrender value.

(4) to borrow from the company, using the cash value as collateral.

Each policy provides a table illustrating the first 20 years of its guaranteed cash values.

1. provision in a cash value life insurance policy that an insured will receive the equity in some form even if the insurance is canceled.
2. vested benefit to a retirement plan participant. It is enforceable against the plan.