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        Updated: April 23, 2024

        Life Insurance Surrender Value

        Thinking of surrendering your whole of life insurance policy? Read our guide to find out how to do this and what the implications could be.

        Ask a quick question

        We can help! We know everyone's circumstances are different, that's why we work with brokers who are experts in whole of life insurance. Ask us a question and we'll get the best expert to help.

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        No impact on your credit score

        The decision to surrender your whole of life insurance policy is not one to be taken lightly.

        There are a number of important factors to consider and you need the right advice before you make that decision.

        The good news is that the specialist life insurance advisors we work with are experts in this area and can give you the right advice.

        What does surrendering a life insurance policy mean?

        Put simply, you are cancelling your life insurance policy with your provider. You can do this at any time and you’ll receive all of the value of the policy, although there may be some administration charges applied which could reduce the amount you receive.

        You also need to be aware that there is a difference between the surrender value and cash value, so please read on.

        What does surrender value mean?

        Surrender value and cash value can be easily confused. To put it as simply as we can, the surrender value is the actual amount of money you will get if you decide to access the money in your policy.

        There is often an administration fee or penalty that is applied which can affect how much you will be paid.

        Speak to an expert today

        What is the cash value?

        The cash value is the amount of money that is in your account at any given time.

        Your provider uses a portion of your money to make investments on your behalf and then, depending on how well these investments perform, credits your policy accordingly.

        Cash surrender vs value surrender

        As an example, suppose you take out a whole of life insurance policy with your provider with a payout of £200,000 upon your death.

        After paying your premiums for 10 years, you find there is £10,000 cash value on your policy.

        Almost all policies have a surrender charge, which can be as high as 35% or more, depending on the elapsed period of time since the policy was taken out.

        So, although your cash value is £10,000, the provider could charge you a 35% early withdrawal fee of £3,500, leaving you with a surrender value of £6,500.

        Remember that after your policy has been active for a certain period of time, the early surrender fees may no longer apply, so your cash value and surrender value will be the same.

        Also bear in mind that if you surrender your life insurance policy, and then want to take out another policy at a later date, your increased age may be taken into account and this may be reflected in higher premiums or even difficulty in getting life insurance at all.

        The above figures are for demonstrative purposes only, so you should always consult your provider or talk to an expert for the most up-to-date figures and the right advice.

        Why surrender the value of your life insurance?

        There are many reasons why you may want to surrender your whole life insurance, including:

        • Unexpected bills
        • House repairs
        • To cover medical expenses

        While it may help your finances in the short term, this is a decision that needs the right advice. You’ll need to balance your immediate needs, with your future requirements.

        Call 0808 189 0463 or make a quick online enquiry. We’ll match you with one of the experienced life insurance brokers we work with.

        They’ll be happy to answer your questions and advise you on all aspects of surrendering your life insurance policy.

        Should I use a cash surrender value calculator?

        Because everyone is different, with different terms and conditions on their life insurance policies, online calculator tools can only give you a rough idea.

        Consult your provider, or have a chat with one of the expert life insurance advisors we work with.

        They can provide you with bespoke calculations. What’s more, their advice is free and there’s no obligation to act on it.

        Where to get the best advice

        Before you go ahead with the decision to surrender your whole life insurance, you should get some advice on other options open to you.

        If the reason you’re contemplating surrendering your life insurance is to raise cash for an unexpected expense, you might like to consider…

        • Remortgaging a property you own
        • Equity release on a property you own

        We work with expert advisors who can give you the right advice on both of these options.

        Otherwise, you can arrange a free, no obligation chat with one of the expert life insurance advisors we work with. Call us today on 0808 189 0463, we’d love to be able to help and it won’t cost you a penny.

        Ask a quick question

        We can help! We know everyone's circumstances are different, that's why we work with brokers who are experts in whole of life insurance. Ask us a question and we'll get the best expert to help.

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        Pete Mugleston

        Pete Mugleston

        Mortgage Expert, MD

        About the author

        Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

        Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

        FCA Disclaimer

        *Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us as well as any of our own are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

        Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.