A surrender charge in a deferred annuity is:

Explanation

A surrender charge is a fee the insurer applies when the owner takes out more than the contract permits (or fully surrenders) during the surrender charge period, which usually declines to zero over a set number of years. It is not a government tax penalty (a separate 10 percent IRS penalty may apply before age 59 1/2), not the producer's commission, and not a credited bonus. Surrender charges let the insurer recover early costs and discourage quick withdrawals.