What Is Life Insurance Cash Surrender Value? 
The two main types of insurance that have cash value are commonly universal life and whole life insurance policies . These types of permanent life insurance policies build cash value by over funding premiums . These types of policies have many perks and riders . If you were to cancel or `` cash out '' this policy type the amount of money you would receive is known as cash surrender value . The gains on this cash is taxed as ordinary income . If you were to leave the policy in force and simply borrow the cash , those funds can be used income tax free . I would advise speaking to your agent or carrier about all of your options before cashing out . 