What happens to the life insurance policy if the insured decides to surrender it for cash value?

When an insured decides to surrender a life insurance policy for its cash value, the contract is effectively terminated. This means that the policy is cancelled, and the insured is no longer covered by the life insurance plan. At the time of surrender, the insured is entitled to receive the cash value accumulated within the policy, which was typically built up through premiums paid over time and through any interest or dividends, where applicable. Once the policy is surrendered, all coverage ceases, and therefore, no further benefits will apply to the insured or their beneficiaries.

In contrast, maintaining an active policy with continued premiums, taking cash value as a loan, or needing to continue paying premiums after surrendering the policy would not align with the mechanics of surrendering a policy for cash value. Under surrender, the policyholder is opting out of the insurance coverage and liquidating the cash value, concluding the contractual relationship with the insurer.