Enter the total premiums paid and the surrender charge percentage into the calculator to determine the surrender value of an insurance policy or annuity.
Surrender Value Formula
The following formula is used to calculate the surrender value of an insurance policy or annuity.
SV = TPP * (1 - SC / 100)
Variables:
- SV is the surrender value ($)
- TPP is the total premiums paid ($)
- SC is the surrender charge (%)
To calculate the surrender value, multiply the total premiums paid by the percentage of the premiums remaining after the surrender charge is applied.
What is a Surrender Value?
Surrender value is the amount that the policyholder will receive from the insurance company if they decide to terminate the policy before it matures or before the insured event occurs. This value is typically less than the total premiums paid due to surrender charges that the company applies for early termination of the policy.
How to Calculate Surrender Value?
The following steps outline how to calculate the surrender value.
- First, determine the total premiums paid (TPP) in dollars.
- Next, determine the surrender charge (SC) as a percentage of the total premiums paid.
- Next, gather the formula from above = SV = TPP * (1 – SC / 100).
- Finally, calculate the surrender value (SV) in dollars.
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem :
Use the following variables as an example problem to test your knowledge.
Total premiums paid (TPP) = $10,000
Surrender charge (SC) = 10%
