Pursuant to this thread in What's Your Deal, I cashed in both my and my wife's policies.

I got direct deposit information today and the amounts deposited are significantly MORE than I was expecting based on the most recent statements of cash value, even after state and federal taxes were taken out. Nearly double, in fact.

Am I correct in assuming that there's a difference between "cash value" and "surrender value"? Or has someone made a mistake?

Wow, never heard of anything like that. Normally, the surrender value is equal to the cash value minus any surrender fees.

I'll do some more research, or maybe someone else knows.

Call the company. If it is a mistake the auditor will catch it and you will get ugly demand letters.

OK, I found something. There is something called "Enhanced Cash Surrender Value". It's basically an enticement for a long-term policyholder to cash in their policy for an amount greater than the actual cash value, but less than the coverage amount (aka face amount).

That way the insurance company can stop worrying about paying out a large amount later when the insured person dies, death being an absolute certainty at some point. The insurance co. is happy, the policyholder is happy, everyone is happy.

quote:

Originally posted by kkina:
OK, I found something. There is something called "Enhanced Cash Surrender Value". It's basically an enticement for a long-term policyholder to cash in their policy for an amount greater than the actual cash value, but less than the coverage amount (aka face amount).

That way the insurance company can stop worrying about paying out a large amount later when the insured person dies, death being an absolute certainty at some point. The insurance co. is happy, the policyholder is happy, everyone is happy.

Cool! I'm assuming I'll get some sort of documentation eventually to verify the amounts.
I don't plan to spend any of it any time soon anyway.

Yes, see if the paperwork mentions this feature, maybe as a special rider. At any rate, I'm real happy for you, Bro.

Oooops...I mis-remembered the cash values, and/or overestimated the tax withholding.

The amounts received are within a couple of hundred dollars of the stated cash value.

Either way, a pleasant surprise.

Insurance stuff is difficult to understand, even for people in the business. You still basically made the right move here.

I have to call companies almost every day to ask about cash or surrender value. When I'm replacing such a policy, I don't start the new one until the old one's payment is due and I stop that automatic bank draft days or weeks ahead of that day. It can be six weeks between when the company tells me the CV number and when I fax in the surrender. The CV goes up every day by a few pennies or dollars, so it's impossible to tell the customer to the penny how much they'll get, though it's always more than on the day we call about it. And this is for small, final expense stuff. I would imagine that for the bigger stuff - $50k or more, and, depending on how old you are, the CV can be a lot bigger when you get the check than when you first asked about it.