What Does Front Loading Mean?
Front loading, in the context of insurance, is a practice whereby insurers subtract the expense charges, fee, commissions, or interests of a policy right away from the initial premiums paid.
Insuranceopedia Explains Front Loading
Front loading is the opposite of back loading, or the practice wherein expenses that come with the insurance policy are taken out upon its maturity, when the policy is surrendered, or when cash is withdrawn from the policy.
For example, in an insurance policy with 5% front loading and a $100 monthly premium, $5 is taken out. Thus, the insured must pay a premium of $105 per month until all the expenses, charges, and interests have been paid, or until the time agreed in the policy.