The cash value of the policy, also known as "cancellation fee" or "surrender fee", refers to the amount that the life insurance company should return when the insured requests cancellation or surrender. Simply put, it is how much your insurance policy is worth at the current time.
Cash value of the policy = premium paid by the insured-the share of the insurance company's management expenses in the policy-the commission paid by the insurance company to relevant personnel due to the policy-the pure premium paid by the insurance company+the interest generated by the residual premium.
As can be seen from the above formula, if the premium paid by the policy is higher than the operating cost and guarantee cost, the insurance company will store it for you to invest and earn interest, and the cash value will always be affected by the following factors: whether there is any premium to pay, policy interest, whether it has been paid, time, etc. And change.
Extended data:
The role of cash value:
Except when surrendering, the insured can receive the surrender money according to the cash value, and the cash value is ok.
1, policy loan
Policy loan is a good advantage of 1 savings insurance, and you can get the corresponding money with lower interest. But generally speaking, the maximum amount of policy loan is 70%-90% of the cash value of the policy, which is related to different insurance companies' policies.
2. Dividends
If it is dividend insurance, the insurance company pays dividends according to the cash value, and the dividend amount = dividend rate * cash value.
3. Automatic advance payment
If you can't pay the premium in a short time, you can apply to the insurance company and use the cash value of the policy to pay the premium automatically. The contract is still valid, and payment will be made when the economic ability is alleviated.
4. Pay the reduction.
If it is unable to pay for a long time, the balance of the current cash value of this contract after deducting the unpaid insurance premium and interest, loan and interest can be regarded as the total insurance premium paid in one lump sum, and the insurance amount can be reduced under the same contract conditions to keep the contract valid.
Baidu Encyclopedia-Cash Value