YOU ASK:
What is the definition of Surrender Charge?
WE ANSWER:
The Surrender Charge is the fee tacked on if the life insurance policy owner or annuitant decides to surrender or cancel the policy or annuity contract. This is particularly true if the surrender or cancellation occurs within a specified period (like five to seven years).
The surrender charge or surrender fee covers the costs of maintaining the contract in the books of the insurance company.
If you want to save on the surrender charge, you can have it waived if you inform the insurance company well in advance regarding the cancellation of the policy or annuity. Then, the payments are continued for a certain time before the contract is actually canceled.
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