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Surrender Charge

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Surrender Charge
1. A fee one must pay when canceling a life insurance policy. A surrender charge is levied to encourage a policyholder to remain with the same insurer.

2. A fee one must pay to a mutual fund for selling one's shares within a certain period of time. For example, one may be required to pay a surrender charge if one sells shares in the first year or two of ownership. The surrender charge exists to encourage stability in ownership of the mutual fund; that is, it discourages traders from speculating on the fund.

3. A penalty charge one owes if one makes a premature withdrawal from an annuity, insurance contract, or some other investment vehicles.
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To that end, you can offer annuities with a range of surrender charge durations.
Why your clients don't have to tie up money any longer: 4 ways to ... by Conklin, Chris / Agent's Sales Journal
In a case of first impression, the Tax Court held that where the profit-sharing plan of an S corporation wholly owned by the taxpayers distributed to them a life insurance policy on their lives, the taxpayers could not reduce the taxable value of the could not reduce the taxable value of the policy by the amount of the surrender charge for purposes of determining their income from the transfer.
Tax court rules on valuation of life insurance policy in bargain sale by Beavers, James A. / The Tax Adviser
No surrender charge can be levied by an insurer for policies surrendered from the fifth policy year and thereafter the policyholder will be entitled to receive the full fund value on such surrender," IRDA said in a circular sent to CEOs of all life insurance companies.
Insurers told not to levy exit fee after five yrs by Mail Today (New Delhi, India)
 
 
 
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