portion of life insurance premiums paid that can be received if the policy is canceled. The beneficiary has the option of canceling the policy. Cash surrender value is classified on the balance sheet under Investments. As the company pays premiums, part represents an expense and part applies to the cash surrender value. The difference between the premium paid and the increase in cash surrender value represents an expense.

Cash surrender value of life insurance applies to ordinary life and limited payment policies. Term insurance does not have a cash surrender value.