Whole Life and Universal Life insurance policies accumulate cash values over time.
If these policies are cancelled (or surrendered) before the insured dies, any cash value is payable to the policy owner, less surrender charges. This final amount (cash value minus surrender charges) is the surrender value (also known as cash surrender value).
If the policy is surrendered too early and/or the investment portion of the policy performs poorly, the surrender value may be zero.
If the insured has a limited life expectancy, the owner may be get more money by selling the policy as part of a life insurance settlement (or viatical) transaction, rather than surrendering the policy.