Recapture Charge

A recapture charge is a fee that is assessed when certain conditions are not met in financial agreements, particularly in insurance policies and leases. In the context of insurance, a recapture charge is commonly associated with universal life insurance policies. It is a fee that the insurance company charges if the policyholder surrenders the policy, typically within a certain period after the policy is issued.

This charge is designed to recoup the insurance company's initial expenses incurred in issuing the policy, such as underwriting, medical exams, and agent commissions.

The recapture charge often decreases over time and eventually disappears, meaning that if the policyholder holds the policy for a long enough period, they can surrender it without incurring this fee.