A provision that allows a policyowner to withdraw a policy's cash value interest free is a(n)

• A. Interest-free withdrawal
• B. Partial surrender
• C. Cash value withdrawal
• D. Full surrender

Answer: (B)

Accessing cash value without paying interest is achieved by a partial surrender. This means you surrender only a portion of the policy’s cash value while keeping the policy in force. Since you’re not borrowing against the cash value, no loan interest is charged. The amount you surrender is paid to you, and the death benefit is reduced by that same amount (the policy continues, but with a lower death benefit).

This differs from a policy loan, which borrows against cash value and accrues interest, and from a full surrender, which ends the policy and pays out all the cash value. A cash value withdrawal is a broader term, but the specific provision described—withdrawal of part of the cash value while keeping the policy active and without interest—maps to a partial surrender.