Chartered Life Underwriter Practice Exam 2025 – All-In-One Guide to Secure Your CLU Success!

Surrender value refers to the amount a policyholder receives when they decide to cancel their permanent life insurance policy prior to its maturity date. This amount is typically accumulated over time as part of the cash value component of the policy, which represents savings or investment growth. It serves as an incentive for policyholders, as they can receive a portion of their investment back instead of losing it entirely if they opt to discontinue the policy.

The cash value is built up through premium payments, and part of that value can be accessed by the policyholder if they choose to surrender the policy. Therefore, the definition provided best encapsulates what surrender value means in the context of a life insurance policy. The other options describe different aspects of life insurance but do not accurately define surrender value.