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.
References in periodicals archive ?
Oxford Life refunded $67,559 that 17 consumers lost in surrender fees on its annuities.
While annuities were meant to provide lifetime income, they have can have high management and surrender fees. People may find they pay high percentages on what they take out of their annuity.
Senior investors, in particular, should beware of the high surrender fees and steep sales commissions agents often earn when they move investors into variable annuities.
exceeds the surrender fees." For an expected value-maximizing policyholder, this case occurs if the surrender value of the policy exceeds its fair value.
What Fisher likes about annuities is his annuity conversion program, which buys folks out of their annuity surrender fees if they become long-term clients.
But, for example, if a contract has a 10-year payout, a participant could transfer 10% of his fixed-account balance per year to other investments offered within his 403(b) plan without incurring surrender fees or early withdrawal fees, Walsh explains.
As you well know, each churn generates not only commissions, but also surrender fees and other penalities.
Accessing life insurance policy cash values through loans and withdrawals will reduce the stated cash value and death benefit amounts, and may result in surrender fees and other charges.
It's possible that VAs have been ignored because of their high asset-based insurance fees and a limited selection of investment options, complex structure, surrender fees and steep commissions.
This may affect, for example, the way variable annuities are sold, where more detailed and transparent disclosure of commissions, surrender fees and other ongoing fees will be required.
Investors who "quit" the annuity before a specified period has elapsed could pay hefty surrender fees.
Insurance officials say surrender fees for annuities are higher than other investments because they're meant to be a lifetime investment.