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How to calculate the cash surrender value

A cash surrender value is an option typically associated with life insurance, and sometimes with annuities, that is available to the policyholder should the policyholder elect to cancel or surrender his life insurance policy or annuity.

The cash surrender value (occasionally abbreviated as CSVLI in insurance jargon) is the amount a life insurance policyholder is due after deducting surrender charges, loans, and loan interest. (Cash surrender values may have additional fees if taken before the surrender period expires--normally after five to ten years.)

Identify the cash value of the policy or annuity. Life insurance policies (whether universal life insurance or variable universal life insurance) have as part of the policy terms a cash value table or schedule that determines what cash value the policy is worth as it matures. This value will be subject to surrender charges, loans, and loan interest taken against the policy, if any exist.

Calculate the surrender charges. Surrender charges range from policy to policy and from provider to provider, but are generally 7 per cent of the policy's cash value and in effect from five to ten years. A schedule or table of surrender charges must be disclosed when the policyholder initially takes out a life insurance policy or annuity. Surrender charges typically graduate downward in amounts as the policy ages until the surrender period expires (normally 1 per cent per year).

Determine loans and loan interest against the policy. Policyholders may take out loans against their life insurance policy and elect to pay them back with interest or not repay the loan. In the former instance, the policyholder's loan against the life insurance policy will be repaid with interest to maintain the cash value of the policy. In the latter instance, the policyholder elects not to repay the loan and the loan amount is subtracted from the death benefit.

Add the surrender charges, loans, and loan interest and subtract the sum from the cash value of the policy or annuity. This will yield the actual cash value of the policy or annuity.


Policyholders may be able to withdraw up to 10 per cent to 15 per cent of the value per year without paying surrender charges (this will vary depending on the policy or annuity).


Surrender values are essentially a sales charge, and the less mature the policy or annuity is, the greater the surrender values are.

Things Needed

  • Calculator
  • Schedule of surrender charges