A type of transaction fee that applies if you withdraw some or all of your money from a variable annuity within a certain period of time, such as six to ten years, following each premium payment invested in the contract. This is known as the surrender period. The fee decreases each year until it becomes zero, although a new surrender charge period will begin with each new premium payment. Surrender charges will reduce the value and the return of your investment.
A surrender charge might also apply upon a full surrender, lapse, or decrease in face amount value of a variable life insurance policy. Unlike variable annuity surrender charges, a variable life insurance policy surrender charge is not tied to premium payments. Instead, it is calculated based on individual characteristics of the policy holder (e.g., age and other characteristics).
