If you have a permanent life insurance policy that has been building cash value, and you choose to terminate or cancel that policy, the 'cash surrender value' is the amount you will receive in accumulated value, less outstanding loan amounts or applicable fees. If you are using your life insurance policy as an asset, or as collateral against another type of loan, cash surrender value is important, as CSV will be used to determine the actual worth of the policy. By using the cash surrender value as the collateral for the loan, the lender is assured of the recovery of the value of the loan, even if the debtor fails to honor his or her obligations.