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For example, in a universal life insurance policy the policy value (or fund value) would be the accumulated cash value which is earning interest. However, almost all universal life insurance policies have a decreasing surrender charge schedule. This means that if you were to surrender the policy in the early years the surrender charge could reduce most (or all) of the value you receive. The value you would receive is called the net surrender value, because it is net of all charges.
At some point, say 10 or 20 years down the road, the surrender charges will go away and the policy value will equal the net surrender value. This is part of the reason why cash value life insurance should always be looked at as a long term proposition.