What can be inferred about the relationship between surrender charges and policy duration?

The correct choice indicates that surrender charges typically decrease over time for most policies. This is an important concept in insurance that relates to how surrender charges work.

Surrender charges are fees that the insurance company imposes when a policyholder decides to cancel their policy or withdraw funds before a specified period, typically known as the surrender period. This fee is designed to recover the company's initial costs associated with issuing the policy, which include commissions and administrative expenses.

As the policyholder continues to hold the policy and as time progresses, the insurance company has already recouped much of its initial investment. Consequently, the need for the surrender charge diminishes, and thus these charges often decrease or even disappear after a certain timeframe. This structure incentivizes policyholders to maintain their policies for longer durations.

This understanding shows that surrender charges are a means of protecting the insurer's financial interests, and the decreasing nature of these charges over time reflects an acknowledgment of the policyholder's commitment to the contract.