What happens to the cash value of a permanent policy if the policyholder surrenders the policy?

When a policyholder surrenders a permanent life insurance policy, they are entitled to receive the accumulated cash value of the policy. This cash value is essentially the savings component of the life insurance policy that has built up over time. However, it is important to note that when the policy is surrendered, certain deductions may be applied, such as any outstanding loans against the cash value or surrender charges specified in the policy. Consequently, the amount paid out to the policyholder will be the cash value minus these deductions.

This option reflects the process accurately, as it acknowledges that while the policyholder will receive a payout, it may not be the full cash value due to specified deductions that can occur when a policy is surrendered.