Florida Life, Health, and Variable Annuity Practice Exam 2025 - Free Practice Questions and Comprehensive Study Guide

The Cash Surrender Option allows a policyowner to receive an immediate cash payment based on the policy’s cash value. When a policyowner chooses this option, they essentially terminate the policy and receive the accumulated cash value, which is the amount that has built up over time, minus any surrender charges or loans taken against the policy.

This option is particularly relevant for insurance policies that accumulate cash value, such as whole life and universal life policies. It provides flexibility for the policyowner, allowing them to access funds if they need liquidity or if they no longer wish to maintain the policy. The cash value is the amount available to the policyowner upon surrender, contrary to simply receiving premiums paid or other options that do not pertain to the core premise of the Cash Surrender Option.