How long can an insurer legally defer paying the cash value of a surrendered life insurance policy?

The correct answer is that an insurer can legally defer paying the cash value of a surrendered life insurance policy for a maximum of 6 months. This provision is put in place to protect the insurer from an immediate payout that could significantly impact their financial stability, while still ensuring that policyholders have a reasonable expectation of receiving their cash value in a timely manner.

This 6-month waiting period is a standard timeframe outlined in insurance regulations, allowing insurers to manage their liabilities effectively while also providing a safeguard for policyholders. Recognizing that policyholders might need access to their cash value for various reasons, the legally mandated period ensures that they are not left in a prolonged state of uncertainty regarding their funds.