Front Loading

What Does Front Loading Mean?

Front loading, in the context of insurance, is a practice in which insurers deduct the expense charges, fees, commissions, or interest from the initial premiums paid at the start of the policy.

Insuranceopedia Explains Front Loading

Front loading is the opposite of back-loading, where expenses associated with the insurance policy are deducted upon its maturity, at the time of surrender, or when cash is withdrawn from the policy.

For example, in an insurance policy with a 5% front-loading charge and a $100 monthly premium, $5 is deducted upfront. Therefore, the insured must pay a premium of $105 per month until all expenses, charges, and interest are covered, or until the period specified in the policy.