The amount payable to a person who surrenders a life insurance policy.
- Because of the poor return on surrendering endowment policies, there is now a market for selling endowment policies - usually at a better price than the surrender value under the policy.
- The assured is then paid the surrender value of the policy, which is calculated by an actuary on the basis of the amounts paid to date.
- This means that there may be a tax liability if the cash surrender value exceeds the adjusted cost base of the policy, although the donation credit will likely outweigh this.
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