What Happens When You Surrender A Life Insurance Policy? 
When you surrender your life insurance policy , your coverage ends and you stop paying premiums . The insurance company will pay the cash surrender value of the policy which will take a week or two . The cash surrender value is less than the total cash value in the early years of a policy due to a surrender charge which is usually a charge that decline to zero over a period of 5-20 years , depending on the policy . Any policy loans outstanding also reduce the cash value . If you have any gain in the policy - cash surrender value less premiums - then it will be taxable as income . 