What is cash surrender value and why isnt that the fair market value?
Life Valuator is a service of Hawkins Consulting Corporation. Hawkins Consulting can provide you with an estimate of the fair market value of a life insurance policy. This valuator service is also available for other types of insurance policies such as life annuities and disability insurance. Fair Market Value A life insurance policy can have a fair market value that is materially larger than its cash surrender value. A larger fair market value can arise from: • Impaired health of the life insured causing the fair market value of the policy to exceed the cash surrender value. • Insurance company having given the policy unnaturally low cash surrender values. • External factors such as current interest rate levels causing cash surrender values to be low today. When to Use Fair Market Value Use fair market value of a life insurance policy for: Sale to Non-Arms Length Party • Independent estimate of fair market value • Conducting shareholder / corporate transactions at fair market value •
