What does it mean to surrender a Variable Life Insurance policy?

Surrendering a Variable Life Insurance policy means canceling the policy and receiving its cash value after any applicable charges. This option reflects the process where the policyholder chooses to terminate the insurance coverage, which allows them to access the accumulated cash value of the policy.

When a policy is surrendered, the insurer will provide the policyholder with a payment that represents the cash value, minus any surrender charges or outstanding loans. It's important to understand that this action ends the life insurance coverage permanently, and the policyholder will no longer have the death benefit associated with the policy.

Taking out a loan against the policy involves keeping the coverage active while borrowing against the policy's cash value, which does not constitute a surrender. Transferring the policy ownership refers to moving the ownership rights to another person or entity and does not involve cashing in the policy. Increasing premium payments permanently alters the financial commitment of the policyholder but does not relate to surrendering the policy. Thus, the correct understanding of surrender is about the cancellation and cash withdrawal aspect.