Surrender value can be defined as the amount payable to a person when the person surrenders his/her life insurance policy. The surrender value of the policy is discussed only once the policy is in effect.

A policyholder can surrender his/her policy to the insurer and receive the surrender value as a refund. The surrender value is calculated based on premiums paid and how long the policy was in effect. Surrender of a policy is usually allowed after a certain period of time.