Surrender Rights


DEFINITION of 'Surrender Rights'

A right to cancel an annuity or life insurance contract in exchange for its cash value. Surrendering such a contract early can incur surrender charges (fees charged by the company upon cancellation) as well as income tax liability. Before exercising a contract's surrender rights, contract holders should determine the contract's cash value, what fees and taxes will be incurred upon surrender, and how much cash they will ultimately net from canceling the contract.

BREAKING DOWN 'Surrender Rights'

In the case of life insurance, getting a life settlement in exchange for the life insurance contract may be a more lucrative option than surrendering the policy. Contract holders should also keep in mind that if they choose to repurchase a similar contract later on, the new contract may be more expensive. Not all annuities and life insurance policies have surrender rights.

  1. Annuity

    A financial product that pays out a fixed stream of payments ...
  2. Surrender Period

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  3. Values

    The worth of a nonforfeiture clause that specifies that an insured ...
  4. Transfer-For-Value Rule

    The stipulation that, if a life insurance policy (or any interest ...
  5. Whole Life Insurance Policy

    A life insurance contract with level premiums that has both an ...
  6. Cash Surrender Value

    The sum of money an insurance company will pay to the policyholder ...
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