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 ?
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.
If a cat has an unwanted litter, Greenhill will take the litter for adoption for a small surrender fee.
178) In Pennsylvania, maternity homes persisted in the despised practice of accepting babies upon payment of a surrender fee of $50-100.
The lock-in, after which no surrender fee is levied, is five years.
In addition, it has no annual maintenance fees, no initial sales charges, and a low 2 percent surrender fee should an investor need to sell his or her contract or take excessive withdrawals during the first five years of ownership.
It has a base mortality and expense fee of 115 basis points, and a seven-year surrender fee schedule of 7-6-5-4-3-2-1-0.
Accessing cash values may result in surrender fees and charges, may require additional premium payments to maintain coverage and will reduce the death benefit and policy values.
As you well know, each churn generates not only commissions, but also surrender fees and other penalities.
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.
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.