What’s the surrender value of my life insurance policy?
If you’ve held onto your whole life insurance from the days when that product was widely available in Australia, your policy may have a cash surrender value.

If you’ve held onto your whole life insurance from the days when that product was widely available in Australia, your policy may have a cash surrender value.
KEY POINTS
- Whole life insurance is no longer available, though some Australians may still have active policies that effectively combine life insurance with superannuation.
- You may have the option to ‘surrender’ your policy to access the cash value of its investment component.
- Consider seeking financial advice before surrendering a whole life insurance policy, to make sure your future can remain secure.
Whole life insurance is a product we rarely see any more in Australia, but it was quite common before the introduction of compulsory superannuation in 1992.
Some people (such as some Australian seniors) may still hold whole life insurance policies taken out before this date, and may subsequently be in a position to terminate or ‘surrender’ their policy in return for its cash value.
Before we give an overview of how this works, let’s remind ourselves of what whole life insurance involves and how a policy could have ended up with a ‘surrender value’.
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What is whole life insurance?
These days, most of us save for retirement through our super, using different mixes of employer and personal super contributions. But prior to the introduction of compulsory super, whole life insurance was an option available to those who wanted to be proactive about saving for their retirement.
A whole life insurance policy’s total value comprised an insurance component and an investment component. A fixed proportion of each premium payment typically went towards each component.
The insurance portion of your premium was treated like a standard life insurance premium, but the rest of your premium was invested with the goal of generating returns and accumulating over the long term, much like superannuation.
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What is the surrender value of a whole life insurance policy?
The surrender or cash value of a whole life insurance policy is the total value of the accumulated investment component that you can access by choosing to terminate your policy.
The term ‘surrender value’ refers to the fact that in order to access the money you’ve accumulated within the investment component of your policy, you have to ‘surrender’ the coverage it provides you.
The term ‘cash value’ is also used to refer to the fact that as a policyholder, you can receive the investment component as a cash lump sum upon terminating your policy.
How much will my surrender value be?
The surrender value of life insurance policies is typically determined by a few different factors. The given value of your policy’s investment component will essentially be an estimate based on the total value of the various assets it’s invested in.
Once your policy’s investments have been sold off and any relevant fees (potentially including a surrender fee) have been deducted from the proceeds of said sales, you’ll be paid what is left.
Much like any other investment that earns interest, a whole life insurance policy’s investment component is designed to grow over time. So if you’re thinking of cashing out your policy, it may be worth considering the potential benefits of holding off and letting compound interest accumulate.
You should also consider the insurance implications of cashing in your policy, including whether you would still have enough life insurance cover for your needs after doing so.
One course of action could be to call your insurer and ask what the surrender value would be and if there were any options available, such as converting to a different type of policy or investment stream.
It could be worth considering seeking financial advice before making any decision.
Can I take out whole life insurance?
No. Whole life insurance is no longer offered by Australian life insurers. It’s been replaced by term life insurance (for insurance purposes) and superannuation (for retirement saving purposes).
You can compare both life insurance and superannuation with Canstar.
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This article was reviewed by our Finance Editor Jessica Pridmore before it was updated, as part of our fact-checking process.

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