Legal Definitions - cash-value option

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.