What does "surrender value" indicate in a life insurance policy?

Surrender value refers to the amount of money that a policyholder will receive if they decide to cancel or "surrender" their life insurance policy before its maturity date. This value is particularly relevant for policies that build cash value, such as whole life or universal life insurance.

When a policy is surrendered, the insurer calculates the surrender value by considering the accumulated cash value of the policy, minus any applicable surrender charges or outstanding loans. This amount provides a liquidity benefit to the policyholder as it reflects the investment the policyholder has made in their insurance policy, less the costs associated with canceling it.

The other options focus on different aspects of life insurance policies. The total amount paid in premiums over the policy's life does not account for factors like interest or growth that contribute to the cash value. The cash value available for loans is a related concept but refers specifically to the portion of the cash value that can be borrowed, not what is paid out upon surrender. Lastly, the payout upon the death of the insured pertains to the death benefit, which is separate from the surrender value. Thus, B accurately captures the essence of surrender value within a life insurance policy.