What is cash surrender value on balance sheet

Cash surrender value is the amount of cash that a person can receive upon the cancellation of an insurance policy or annuity. This amount is usually associated with whole life insurance policies, which have a built-in savings component.

Where does cash surrender value go on the balance sheet?

The cash surrender value of the life insurance policy is no longer an asset, so its balance must be removed from the B/S. The entry is balanced by recording a mortality gain on the income statement of the company.

Is cash surrender value a current asset?

Examples of other current assets are the cash surrender value of life insurance policies, advances paid to suppliers, and advances paid to employees. Since these residual accounts are current assets, their contents must be convertible into cash within one year or one business cycle.

What is cash surrender value in accounting?

Cash surrender value refers to the actual amount of money you receive when you cancel—or surrender—your life insurance policy or annuity, minus surrender fees or any funds needed to pay off loans or unpaid premiums. In the case of annuities, it may be called the annuity surrender value.

What type of asset is cash surrender value?

Cash surrender value is money an insurance company pays to a policyholder or an annuity contract owner if their policy is voluntarily terminated before maturity or an insured event occurs. This cash value is the savings component of most permanent life insurance policies, particularly whole life insurance policies.