Back Load

What Does Back Load Mean?

A back load is a financial arrangement in which one party postpones payment until a specified time or a future transaction occurs. For example, it may involve paying another party a portion of the amount owed after the sale of shares or stocks.

Insuranceopedia Explains Back Load

A back load financial agreement is associated with purchasing a financial product, such as stocks or shares. This back load may take the form of a sales charge or a portion of the shares purchased. Payment for this back load is deferred based on the terms of the agreement. For instance, the sales charge might be paid after the shares are sold, or a portion of the stocks or their value may be provided after the entire stock purchase is completed.

Back-load arrangements also show up in insurance-related financial products, most commonly with annuities, where the sales charge is collected only if the contract is surrendered or money is withdrawn early. The same basic structure can apply to some cash-value policies, including certain permanent life insurance and universal life contracts, where part of the cost is taken from the policy if the owner cancels instead of being paid upfront at purchase.