By the time a California dissolution reaches the disclosure schedules, most of the assets have been measured by somebody whose job it was. The house gets an appraiser. The dental practice gets a forensic accountant. The pension gets an actuary and a QDRO. The life insurance policy gets no such treatment. The figure written beside it is whatever the carrier printed on the last annual statement.
Nobody chose that number. It was just the only one anybody had.
The Code Tells the Court to Value It. It Never Says How.
Family Code section 2552 directs the court to "value the assets and liabilities as near as practicable to the time of trial." That is the whole instruction. It fixes a date, says nothing about method, and draws no distinction between a duplex and a universal life contract.
Practice filled that gap a long time ago. Since In re Marriage of Holmgren in 1976, where the community's two policies entered the judgment at surrender values of $617 and $3,825, California courts have generally treated a permanent policy as worth its net cash value: cash value, plus dividends, minus outstanding loans. Term insurance, having no cash value to point at, is usually treated as worth nothing at all.
That approach works fine for a policy bought at 35 on a healthy person. It works badly at 72.
Why the Carrier's Number Is a Floor
California law is not actually blind to the idea that a policy can be worth more than its cash. Term coverage is the proof. Under Estate of Logan, a term policy becomes divisible community property when the insured dies or becomes uninsurable during a period community funds paid for, on the reasoning that the right to keep renewing is worth real money to somebody who can no longer go buy coverage. Failing health is already the trigger in California law. Nobody has attached a number to it.
Outside family court, that number has a market. Institutional buyers price older policies on the insured's age and health, which is why declining health raises what a policy fetches instead of lowering it. Life settlements in 2025 paid an average of $212,066. The average cash surrender value across those same transactions was $24,360, according to the Life Insurance Settlement Association. That is nearly nine times the number a divorce file would have recorded.
Individual results vary, and buyers in that market generally want an insured past 65 and a policy written for at least $100,000, so a great many contracts never qualify. Brokers such as Citizens Life Group handle the seller's end of that market, putting a single contract out to bid and reporting back what the buyers actually offered.
In an equal division, a gap that size decides the settlement.
Nobody Is Allowed to Test It Mid-Case
Family Code section 2040 restrains both parties, from the moment the case begins, "from cashing, borrowing against, canceling, transferring, disposing of, or changing the beneficiaries of insurance or other coverage, including life, health, automobile, and disability."
That order does exactly what it should. It stops one spouse from quietly emptying a policy while the case is pending. It also means the market value of the policy never surfaces by accident. Nobody bumps into it. Somebody has to ask on purpose, before the property is divided, and then take it to the attorney handling the divorce, because a sale during the case needs either the other side's agreement or an order from the court.
What It Costs to Ask
Not much, and the answer comes back no more often than yes. Expired term cannot be sold. Term carrying a conversion option often can be, though it is priced on face amount and health, never as a multiple of a surrender value it does not have. Policies on younger, healthier insureds are usually worth more kept than sold. And a sale ends the coverage, which is the wrong move when the court has ordered the policy maintained as security for support under Family Code section 4360.
A sale also carries tax consequences that depend on the owner's basis in the policy. Those belong to a tax professional and to counsel, not to the carrier's statement.
Still, what the policy would sell for can be established while the case is open, and it stops being available the day judgment is entered. A spouse who signs at cash surrender value has not necessarily made a bad deal. They have made a deal without knowing what the asset was.
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