What feature of a deferred annuity initially charges a fee that reduces to zero after a certain period?

The feature of a deferred annuity that initially charges a fee and then reduces to zero after a certain period is the surrender charge. A surrender charge is designed to compensate the insurance company for the costs incurred in setting up the annuity and for the potential loss of market value when withdrawals are taken too soon. This charge typically applies if the annuity owner withdraws funds or surrenders the contract within the early years of the agreement.

As time progresses, the surrender charge generally decreases and is often structured to vanish after a specified duration, which incentivizes policyholders to stay invested for the long term. It's an important aspect of deferred annuities, as it balances the need for providing flexibility to the policyholder while also ensuring that the insurer can recoup initial costs.

The other options—withdrawal fee, maintenance fee, and premium tax—do not typically have the same structure where they diminish to zero over time in the context of deferred annuities. A withdrawal fee might apply each time money is taken out, a maintenance fee usually covers ongoing administrative costs, and a premium tax is a tax based on the amount of premium paid, rather than being tied to the contract's duration.