What does cash surrender refer to in an insurance policy?

Cash surrender in an insurance policy refers specifically to the process where the policyholder withdraws the cash value and effectively cancels or surrenders the policy. When a policyholder decides to surrender their whole life policy, they receive the accumulated cash value that has built up within the policy over time, minus any applicable surrender charges. This action terminates the policy, meaning the policyholder will no longer have coverage.

This concept is particularly relevant in permanent life insurance policies that accumulate cash value, providing the policyholder with options if they no longer need the coverage or prefer to access the cash value for other purposes. The other answer choices do not accurately describe the cash surrender process. For instance, a guaranteed payment upon policy expiration refers to benefits of the policy, but not to cash surrender. Similarly, increasing cash value or obtaining a loan against the policy involve different processes and do not equate to surrendering the policy for its cash value.