Surrender fee

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.

Surrender fee.

A surrender fee is the penalty you owe if you withdraw money from an annuity or mutual fund within a certain time period after purchase. The period is set by the seller.

In the case of a mutual fund, it's designed to prevent in-and-out trading in a fund, which might require the fund manager to liquidate holdings in order to redeem your shares.

In the case of an annuities contract, there's the additional motive of covering the sales charge paid to the investment professional who sold you the product.

References in periodicals archive ?
In particular, we find that the 7-year surrender schedule--which is attached to most current B-share (4) VA policies--deters lapses during the surrender fee period.
In addition, most FIAs have unusually long surrender fee periods.
You can even surrender before 15 years if you need money for treatment of critical illnesses of self or spouse by paying a two per cent surrender fee. A loan, of not more than 75 per cent premium, is also offered after completion of three policy years.
You can even surrender before 15 years if you need money for treatment of critical illnesses of self or spouse by paying a 2% surrender fee. A loan, of not more than 75% premium, is also offered after completion of three policy years.
Not surprisingly, when the markets crashed soon after and the Hagmans paid a large surrender fee on their life insurance, their total losses were huge.
If a cat has an unwanted litter, Greenhill will take the litter for adoption for a small surrender fee. Are there individuals so desensitized to suffering that they are willing to inflict it on small animals?
You guessed it, the Environment Agency then levied a [pounds sterling]2427 'surrender fee', even though the tanks were remaining in legitimate use.
(178) In Pennsylvania, maternity homes persisted in the despised practice of accepting babies upon payment of a surrender fee of $50-100.
1035 was enacted to provide nonrecognition treatment for taxpayers who have "merely exchanged" annuity contracts and "have not actually realized gain." Finding that the taxpayer was in "essentially the same position after the exchange as she was before the exchange, and the same funds are still invested in annuity contracts (less the surrender fee)," the court held that the partial exchange was a valid Sec.
Once you've set up the plan, you may have to pay a surrender fee to get out of it.
Because the analyzed product has no surrender fee, (13) a strong influence from the chosen target level on surrender behavior is not to be expected.
The lock-in, after which no surrender fee is levied, is five years.