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Simple English definitions for legal terms
cash-value option
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A quick definition of cash-value option:
A cash-value option is a choice given to someone who has a life-insurance policy. This choice allows the policyholder to surrender the policy and receive its cash value at a specific time or any time. It means they can get money back instead of keeping the policy.
A more thorough explanation:
Definition: A cash-value option is a contractual right given to a life-insurance policyholder to surrender the policy for its cash value at a specified time or at any time.
Example: Let's say John has a life-insurance policy with a cash value of $50,000. He can exercise the cash-value option and surrender the policy to the insurance company to receive the $50,000 in cash.
Explanation: The cash-value option is a feature of some life-insurance policies that allows the policyholder to receive the cash value of the policy instead of the death benefit. This option can be exercised at a specified time or at any time during the policy's term. The example illustrates how a policyholder can surrender the policy and receive the cash value as a lump sum payment.