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Guaranteed Surrender Value Formula:
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Guaranteed Surrender Value (GSV) is the minimum amount an insurance policyholder is entitled to receive if they decide to terminate their policy before its maturity date. It represents the cash value built up in the policy.
The calculator uses the GSV formula:
Where:
Explanation: The formula calculates the minimum guaranteed amount the policyholder would receive upon surrendering their insurance policy.
Details: Understanding the guaranteed surrender value helps policyholders make informed decisions about their insurance investments and financial planning.
Tips: Enter the total premiums paid in currency, the GSV factor as a decimal (e.g., 0.3 for 30%), and any outstanding loans against the policy.
Q1: What is the difference between surrender value and guaranteed surrender value?
A: Guaranteed surrender value is the minimum amount specified in the policy, while actual surrender value may be higher based on bonuses and other factors.
Q2: When does a policy acquire surrender value?
A: Most policies acquire surrender value after premium payments have been made for a certain period, typically 2-3 years.
Q3: Are there tax implications when surrendering a policy?
A: Yes, surrender values may be subject to taxation depending on the amount received and the policy duration. Consult a tax professional for specific advice.
Q4: Can I get a loan against my policy instead of surrendering it?
A: Many insurance policies allow policy loans, which may be a better option than complete surrender as the policy remains in force.
Q5: How is the GSV factor determined?
A: The GSV factor is specified in the policy contract and typically increases with the number of years the policy has been in force.