Back-End Load is another name for Deferred Sales Charge, or DSC. It's a kind of commission charged on mutual funds. Purchasers of back-end funds pay no initial commission, like with front end funds, but must commit to staying in the fund family for many years. They are free to redeem their holdings in the fund at any time, but if they do they are charged a percentage as commission according to an elaborate schedule. Generally, it starts out as 5 or 6% (ouch!) for the first year, gradually lowering until after 6 years (the exact time period depends on the company) it is 0%. There is usually no DSC fee charged for switching to another back-end fund in the same fund family.

Other types of mutual fund commission include Front-End Load (FE), which is also called Initial Sales Charge (ISC); and No Load (NL).

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This is also a similar concept with the same wording in the world of Universal Life Insurance. It's also sometimes called Rear-End Load, but that sounds even worse, doesn't it?

Most Universal Life policies will have surrender charges which disappear over the course of 15 years. Thus, as long as you maintain the policy, you aren't charged fees over and above the cost of the insurance. However, if you drop the policy during this 15 year window, you will be charged pro rata for the surrender.

A typical example would be this: At the end of 10 years, a policyholder has accumulated $10,000 in actual cash value in his Universal Life policy. However, the Surrender Cash Value is (say) $8,000. Thus, the Surrender Charge is $2,000.

This is where the Life Insurance Company makes its money; just like the banks who issue Certificates of Deposit for, say, three years. They know almost exactly how many folks will want their money before the three year period is up. If every policyholder kept their Universal Life policy for at least 15 years, the rates would go up on everyone else. And, if every banking customer who took out a 3-year CD left it in there the entire three years, the rate of return would go down for everyone else.

It's just business. Quit your bitching.

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