# Surrender Charge

*Insurance — Finicade finance glossary*

A surrender charge is a fee for cancelling an insurance policy or annuity early, typically starting near 7–10% and declining to zero over seven to ten years. It exists to let the insurer recover the commission it paid upfront. Its practical effect is lock-in: discovering in year two that a product was mis-sold leaves you choosing between a bad contract and a large exit fee.

**Also known as:** surrender penalty, early exit fee

**Related terms:** [Cash Value](https://finicade.com/glossary/cash-value), [Whole Life Insurance](https://finicade.com/glossary/whole-life-insurance), [Variable Annuity](https://finicade.com/glossary/variable-annuity), [Universal Life Insurance](https://finicade.com/glossary/universal-life-insurance), [Prepayment Penalty](https://finicade.com/glossary/prepayment-penalty)

Source: https://finicade.com/glossary/surrender-charge