Surrender Charge
A fee levied on a life insurance policyholder upon cancellation of his or her life insurance policy. The fee is used to cover the costs of keeping the insurance policy on the insurance provider's books.
Investopedia Commentary
If in advance the insured party informs the insurer of the cancellation of his or her policy, and then continues to pay for a period of time before the actual cancellation, the surrender charge is usually waived.
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See also: Permanent Life Insurance Policy, Universal Life Insurance, Variable Life Insurance Policy, Whole Life Insurance Policy