The short answer is that by definition term life insurance does not have cash surrender values. There are rare exceptions, but by default, they do not.

Cash values (or cash surrender values as they are properly known) are available in some life insurance policies, and are mostly available when the policy is cancelled. Commonly, cash values would be available on a whole life policy.

Whole life polices at their core have premiums that are level for your entire life. Knowing that the true ‘cost’ of life insurance goes up when you get older, life insurance companies set up reserves to assist with this. They basically take your life insurance premiums when you first purchase the policy, and start saving towards your death benefit. That death benefit reserve increases over time. Should you cancel your life insurance policy before death, that death benefit reserve becomes available, and the portion of it that’s returned to you is your cash value.

With term insurance, very simply, the insurance is only kept a short period of time – maybe 20 years. There’s no expectation of likely paying for a death benefit, and thus no need for a large death benefit reserve to be built up. Life companies would still do some reserving for term insurance, but at a greatly reduced amount. So if you cancel your term policy, there’s not much reserve that gets released, and thus no cash surrender value.   

There is one exception to this and it’s a bit of a technical exception. Some rare term life insurance policies may have a rider called ‘Return of Premium”. This rider returns your total premiums paid, at the end of a specific period of time. While not technically a cash surrender value, it is money that is returned upon cancellation of the policy so could be considered by a consumers as a cash surrender value.

If you’re considering cancelling your term life insurance policy, be aware that it’s unlikely that you have a cash surrender policy. If you’re looking at purchasing a policy with cash surrender values, then you should look at whole life or universal life insurance policies.