What Does It Mean To Surrender A Life Insurance Policy? 
Surrendering a life insurance policy is an important decision and may have consequences , not only in losing valuable coverage , but potential tax ramifications . Surrendering a life insurance policy terminates the coverage for your beneficiaries or business partners . That exposure could have dire consequences if outstanding financial liabilities exist . And if the policy accumulated cash values beyond basis , the surrender of the policy will trigger an ordinary income tax event . 