How are surrender charges deducted in a life policy with a rear-end loaded provision?

In a life insurance policy with a rear-end loaded provision, surrender charges are typically deducted at the time when the insured decides to surrender or cancel the policy, which is usually closer to the end of the policy term rather than the beginning. This means that any charges incurred due to surrendering the policy are taken from the cash value at the point of surrender rather than upfront during the application or sale process.

In this case, when referring to when these charges are deducted, the correct understanding is that they are considered at the point when the policyholder may choose to access their cash value, effectively "discounting" the amount they receive upon surrender. This ensures that the insurer recoups some of the costs associated with issuing the policy without affecting the initial amount available to the insured at the onset.