Definition of Cash Surrender Value

Cash Surrender Value

This is the amount available to the owner of a life insurance policy upon voluntary termination of the policy before it becomes payable by the death of the life insured. This does not apply to term insurance but only to those policies which have reduced paid up values and cash surrender values. A cash surrender in lieu of death benefit usually has tax implications.

Cash Surrender Value

Benefit that entitles a policy owner to an amount of money upon cancellation of a policy.

Replacement

This subject of replacement of existing policies is covered because sometimes existing life insurance policies are unnecessarily replaced with new coverage resulting in a loss of valuable benefits. If someone suggests replacing your existing coverage, insist on having a comparison disclosure statement completed.
The most important policies to examine in detail are those which were issued in Canada prior to December 2, 1982. If you have a policy of this vintage with a significant cash surrender value, you may want to consider keeping it. It has special tax advantages over policies issued after December 2, 1982.
Basically, the difference is this. The cash surrender value of a pre December, 1982 policy can be converted to an annuity in accordance with the settlement options in the policy and as a result, the tax on any policy gain can be spread over the duration of the annuity. Since only the interest element of the annuity payment will be taxed, there will be less of a tax impact on the annuitant. Policies issued after December 2, 1982 which have their cash surrender value annuitized trigger a disposition and the annuitant must pay tax on the total policy gain immediately. If you still decide to replace existing coverage, don't cancel what you have until the new coverage has been issued.

Account Value

The sum of all the interest options in your policy, including interest.

Accumulated Value

An amount of money invested plus the interest earned on that money.

Benefit Value

The amount of cash payable on a benefit.

Surrender

Give up certain rights under a policy, or give up the policy itself.

Surrender Charge

Expense charges applied when the owner of a policy surrenders a policy for its cash value.

Appraisal Value

An estimate of the market value of the property.

Assessed value

The dollar value of an asset assigned by a public tax assessor for the purposes of taxation.

Cash reserves

The money the buyer has left over after the down payment and all those closing costs.

R Value

A measure of insulation. A measure of a material's resistance to the passage of heat. The higher the R value, the more insulating "power" it has. For example, typical new home's walls are usually insulated with 4" of batt insulation with an R value of R-13, and a ceiling insulation of R-30.

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