What does full cash surrender involve?

Full cash surrender involves terminating the life insurance policy and receiving the cash value that has accumulated within the policy. When a policyholder chooses this option, they essentially end the contract with the insurer. In return, they receive any cash accumulation built up over time, which can be significant depending on how long the policy has been in force and the terms of the policy.

This choice is particularly relevant in whole life and universal life insurance policies, where the policyholder has the opportunity to build cash value through premium payments that exceed the costs of insurance. Opting for full cash surrender means that the insured relinquishes their death benefit once the policy is terminated, but they gain access to usable cash in the present.

The other choices do not accurately reflect the nature of full cash surrender. Keeping the policy active with no premiums would suggest a different arrangement, likely involving policy loans or possibly premium waivers, which are not part of a full surrender. Converting the policy involves changing the type of coverage but does not result in cash surrender; rather, it maintains some level of insurance. Applying for additional coverage without underwriting indicates a different process of securing more benefits without needing to go through the usual application procedure rather than a cash surrender transaction.