Have you ever wondered one incurs capital losses on early termination of policies with cash values? Ask any insurance agent and the likely answer would be, “oh, these plans are for the long term and hence there are losses incurred when the plan is surrendered prematurely.” Most people accept this answer readily, if they even ask at all. It seems like a fact of life few people bother to question. For most policies of such nature, one makes a loss on early termination mainly due to the upfront distribution costs. Let’s take a look at some numbers from an actual savings policy. The annual premium is $1,275. Looking at the first few years of the policy, you will find that the surrender value is almost exactly the result of subtracting the distribution cost from the premiums paid. Year 1: Total Premiums Paid To Date – Total Distribution Cost To ......