Surrender Rights

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Annuity

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

    The amount of time an investor must wait until he or she can ...
  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. Permanent Life Insurance

    An umbrella term for life insurance plans that do not expire ...
RELATED FAQS
  1. What is the difference between the death benefit and cash value of an insurance policy?

    One of the most utilized tools in funding an estate plan is term or permanent life insurance. Purchasing a life insurance ... Read Full Answer >>
  2. Does Medicare provide assistance for patients unable to perform Activities of Daily ...

    Medicare can help those unable to perform the activities of daily living (ADL), although the relationship between ADL and ... Read Full Answer >>
  3. What are examples of the largest companies in the insurance sector?

    In the United States, the two largest life insurance companies, in terms of assets as of 2015, are Metlife and Prudential ... Read Full Answer >>
  4. What impact have terrorist attacks had on the insurance industry?

    Terrorism has led to massive losses for the insurance industry. The attacks on Sept. 11, 2001 totaled $31.6 billion in costs ... Read Full Answer >>
  5. Why do growth investors buy insurance stocks?

    Growth investors buy insurance stocks because as populations age and become more prosperous, there is increased demand for ... Read Full Answer >>
  6. How does the Affordable Care Act affect moral hazard in the health insurance industry?

    To see how the Patient Protection and Affordable Care Act, or "Obamacare," affects moral hazard in the health insurance industry, ... Read Full Answer >>
Related Articles
  1. Investing Basics

    Calculating The Present And Future Value Of Annuities

    At some point in your life, you may have had to make a series of fixed payments over a period of time - such as rent or car payments - or have received a series of payments over a period of time, ...
  2. Home & Auto

    Exploring Advanced Insurance Contract Fundamentals

    Understanding your contract can help you protect our family's financial security.
  3. Bonds & Fixed Income

    Passing The Buck: The Hidden Costs Of Annuities

    These may look like good retirement vehicles, but beware of the fees buried in the fine print.
  4. Options & Futures

    Profit From Unwanted Life Policies With Life Settlement

    With a life settlement you could cash in on your policy money now.
  5. Home & Auto

    An Overview Of Annuities

    These contracts provide a guaranteed income stream. Learn how they work and their benefits.
  6. Options & Futures

    Cut Your Tax Bill With Permanent Life Insurance

    Learn how to lower your income tax and avoid estate tax - all while building wealth.
  7. Professionals

    Tips for Helping Clients with Life Insurance Needs

    Life insurance needs will likely change over the client’s lifetime and again financial advisers can provide an objective sounding board.
  8. Insurance

    Explaining Insurance

    Insurance is a form of contract between an individual and an insurance company that spreads risk in exchange for premium payments.
  9. Insurance

    Top 10 Travel Health Insurance Companies

    Before you take a long trip abroad – or move there – make sure you have enough health coverage. That goes double if you go in for "hazardous sports."
  10. Stock Analysis

    How UnitedHealth Group Makes its Money

    Here's how UnitedHealth Group, poised to grow even more, rakes it in.

You May Also Like

Hot Definitions
  1. Coupon

    The interest rate stated on a bond when it's issued. The coupon is typically paid semiannually. This is also referred to ...
  2. Redemption

    The return of an investor's principal in a fixed income security, such as a preferred stock or bond; or the sale of units ...
  3. Standard Error

    The standard deviation of the sampling distribution of a statistic. Standard error is a statistical term that measures the ...
  4. Capital Stock

    The common and preferred stock a company is authorized to issue, according to their corporate charter. Capital stock represents ...
  5. Unearned Revenue

    When an individual or company receives money for a service or product that has yet to be fulfilled. Unearned revenue can ...
Trading Center