Surrender charges are penalties assessed when you withdraw more than the free-withdrawal allowance (typically 10% of contract value per year) before the surrender period ends. Surrender periods commonly run 3 to 7 years. The charge percentage typically declines each year — for example, 7%, 6%, 5%, 4%, 3%, 2%, 1% — and then reaches zero at the end of the term. These charges exist because they allow carriers to invest your premium in longer-duration assets, which is what enables them to offer higher guaranteed rates.