Definition of "Surrender Charge"

Fee charged to a policyholder when a life insurance policy or annuity is surrendered for its cash value.

The charge for withdrawing money from an annuity before the date agreed upon in the contract. Surrender charges typically are a percentage of the total premium deposited, and the charge decreases to 0 over time as the annuity gets closer to the date it will mature.

A fee that is deducted from the account value of a life insurance policy or annuity contract when the policy or contract is surrendered. These charges generally decrease over time.