The front-end load, or front-end sales charge, is assessed by the insurance company on the investor's initial contribution.
For variable annuities, front-end loads are unusual. Most insurance companies prefer to assess a surrender charge instead. The variable annuity with a front-end load is at a disadvantage because less of the investor's initial contribution will be put to work.
For variable life, the front-end load is deducted from premium payments, usually as a portion of the guideline or target premiums. Unlike VAs, however, variable-life policies often employ both front-end loads and surrender charges. Typically, the front-end load consists of a sales charge intended to defray the insurance company's contract-creation expenses, such as underwriting, brokering, and marketing the policy. Occasionally, the front-end load can include an administration or issue charge--usually expressed as a flat dollar amount. The front-end load listed here does not include charges for premium taxes.