What is the term for the arrangement that guarantees cash value for policyholders who decide to terminate their whole life insurance early?

The term that describes the arrangement guaranteeing cash value for policyholders who choose to terminate their whole life insurance early is known as the cash surrender option. This option allows policyholders to receive the accumulated cash value of their policy when they decide to cancel their whole life insurance before its maturity or before the insured event occurs.

Whole life insurance policies build a cash value over time, which is an integral feature that distinguishes them from term life insurance. When a policyholder opts for the cash surrender option, they can access these funds, although it may not include any additional gains or dividends that are part of the policy.

While other terms like partial withdrawal option might refer to accessing a portion of the cash value while keeping the policy in force, the cash surrender option specifically relates to terminating the policy altogether and receiving the total cash value. Endowment option typically involves a policy that pays out at the end of a predetermined term, and policy cash out is not a standardized term used in the industry to refer to any specific option in whole life policies.