What can happen if a life insurance policy is surrendered?

When a life insurance policy is surrendered, the policyholder typically receives the cash surrender value of the policy. The cash surrender value represents the amount the insurance company is willing to pay the policyholder if they decide to terminate the policy before its maturity or before the insured event (such as death) occurs. This amount is calculated based on the premiums paid, any accrued dividends (if applicable), and the policy’s expenses.

Receiving the cash surrender value allows the policyholder to access some of the funds that have been accumulating in their policy over time, especially in the case of whole life or universal life insurance products. However, it also means that the policyholder will no longer have insurance coverage once the policy is surrendered.

In contrast, the other options involve misunderstandings of the implications of policy surrender. The policyholder does not receive the total death benefit immediately upon surrender, nor do they retain any insurance coverage. Additionally, forfeiting all rights to future claims occurs as a result of surrender, but it is not a direct benefit or outcome as described in the question.