How does the surrender charge apply during the accumulation period of an annuity?

The correct choice highlights that the surrender charge is typically assessed if the owner surrenders the annuity early. During the accumulation phase of an annuity, the policyholder has the ability to withdraw funds or surrender the annuity contract. However, surrendering an annuity before a specified time period, which is usually outlined in the contract, leads to the application of a surrender charge. This charge is designed to discourage early withdrawals and helps the insurer recover some of the costs associated with acquiring the policy and managing the account.

This charge reduces the amount of cash the policyholder receives upon surrender, impacting their overall return on investment if they decide to exit the contract prematurely. It is a common feature of various types of annuities, particularly in those that are front-loaded with fees or have longer accumulation phases.

The other options do not accurately reflect how surrender charges function during the accumulation period. Increasing the cash surrender value is not true, as surrender charges decrease the amount policyholders receive. Guaranteeing a certain amount upon surrender is misleading, as surrender charges can reduce the guaranteed amount significantly if the annuity is surrendered too early. Lastly, while some annuities can have conditions under which charges may be waived, a blanket statement that the charge is waived after