Life Insurance Basics
What is a life insurance surrender charge?
A surrender charge is a fee charged by the insurance company if you cancel a whole life, universal life, or variable life policy during the surrender charge period. Surrender charge periods typically last 7-15 years. The surrender charge decreases over time and eventually reaches zero.
Key Points
- Surrender charge: fee for canceling a permanent life policy during the surrender period
- Surrender charge period: typically 7-15 years
- Surrender charge decreases over time and eventually reaches zero
- Surrender charges protect the insurance company from early policy terminations
- An independent agent can help you understand surrender charges before purchasing