Can CSV Be Taken Out of a Life Insurance Policy?

The CSV is the "cash surrender value" of a life insurance policy. The CSV can be used during your lifetime for any purpose. You simply borrow money from your policy at any time cash value is available in the policy or make withdrawals directly from the cash value, if your insurance policy allows withdrawals.

Benefits

Cash value can be used for any purpose. Loans are generally at preferred rates. This means the insurance company generally charges you a zero percent interest rate on the loan. Loans are open until you die, so you do not have to even repay the loan.

Types

Cash surrender values can be guaranteed or non-guaranteed. Any guaranteed surrender value represents the minimum amount of cash value that will be available for you to take out in any given year of the policy. The non-guaranteed surrender value of the policy represents the amount of money the insurance company projects will be available but which is not guaranteed.

Considerations

Before removing cash surrender values from your life insurance policy, make sure that you understand the impact this will have on your policy. Removing cash from your policy reduces the available cash value and death benefit, which could impact the amount of money available for your beneficiaries.

References

• "Practicing Financial Planning for Professionals (Practitioners' Edition), 10th Edition"; Sid Mittra, Anandi P. Sahu, Robert A Crane; 2007
• "Ernst & Young's Personal Financial Planning Guide, 5th Edition"; Martin Nissenbaum, Barbara J. Raasch, Charles L. Ratner; 2004
• Insure: Cash value in life insurance: What's it worth to you?