What is buy-out?

This refers to the termination of a life insurance or pension agreement at the request of the policyholder. Upon surrender, the policyholder receives the surrender value of the agreement, which is the amount available at that time after deduction of costs and any penalties. Surrender often occurs when someone wishes to prematurely stop a pension scheme or a life insurance policy and receive the accrued credit in a lump sum. However, this can be financially disadvantageous due to possible costs and taxation.