Life Insurance Cash Surrender Value

Cash surrender = cash value − surrender charges. Estimate before cancelling permanent policy.

Result

Loading calculator…

—

How to use this calculator

Get current cash surrender value from policy statement.
Enter surrender charge %.
Enter total premiums paid (basis).

About this calculator

Permanent life policies (whole life, universal life) build cash value alongside death benefit. Surrendering early triggers surrender charges (typically 5-10% in years 1-5, declining to 0 by year 10-15) and pays out cash value minus those charges. Any gain over total premiums paid is taxed as ordinary income. For struggling policyholders, alternatives: 1035 exchange to annuity (tax-deferred), partial surrender, or sell policy in life-settlement market.

Frequently asked

When does surrender charge end?+

Most contracts: zero by year 10-15. Some shorter (5-10), some "modified" or "executive" policies have rolling charges.

Tax on cash value?+

Only the gain (cash value − basis) is taxable, as ordinary income. Loans against policy are not taxable (until surrender).

1035 exchange option?+

Tax-free transfer of cash value into another permanent policy or annuity. Resets basis but keeps tax deferral.

Life-settlement option?+

Sell unwanted policy to investor for more than surrender value (typically 20-30% of face for older insureds). Tax-favored treatment.

Should I keep paying?+

If you no longer need death benefit and surrender charges are high: maybe. If you have ongoing dependent need: term life is usually cheaper than continuing whole life.