What is "surrender value" in the context of a life insurance policy?

Surrender value refers specifically to the cash value that a policyholder can receive if they choose to cancel or surrender their life insurance policy before it matures or before the death of the insured. This value is crucial for policyholders, especially in whole life or universal life insurance, where part of the premiums paid accumulates as a cash value over time.

When a policyholder decides to surrender the policy, they are entitled to the surrender value, which represents the amount of money they will receive from the insurance company, minus any applicable surrender charges or fees. This is an important feature because it provides a financial option for policyholders who may need liquidity or who decide that maintaining the policy is no longer beneficial for them.

The other options do not accurately reflect the nature of surrender value. The total value of the death benefit is distinct from cash value and pertains solely to the amount payable upon death. The amount deducted from premiums is not related to surrender value but rather pertains to charges or fees within the policy. The value of riders, while they may enhance the policy's benefits, does not contribute to the surrender value calculation.