Insurance Commission (IC) Variable Life Licensing 2025 – 400 Free Practice Questions to Pass the Exam

Surrender options in a Variable Life Insurance policy refer to the choices available to policyholders when they decide to terminate the policy. When a policyholder surrenders their policy, they typically receive the cash value accumulated within the policy, which is the total premiums paid minus any withdrawals, policy loans, and fees. This option allows individuals to access the cash value rather than continuing with the policy, providing flexibility according to their financial needs at that moment.

Understanding surrender options is crucial for policyholders as it involves making significant decisions regarding their investment and insurance coverage. The decision to surrender can affect their financial planning, especially considering any potential tax implications on the gain in cash value. It reflects the policyholder's ability to access funds while also highlighting the importance of being aware of all policy features and benefits.

The other choices relate to different aspects of a Variable Life Insurance policy. For example, increasing coverage, taking loans, or switching investment accounts are features that do not involve the termination of the policy itself, which is the core of surrender options.