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LSDefine
Simple English definitions for legal terms
sales load
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A quick definition of sales load:
Sales Load: A sales load is an extra amount of money added to the price of a security or insurance premium to cover the commission and expenses of the salesperson. It is also known as a load or acquisition cost. For example, a mutual fund may have a high front-end load, which means that a percentage of the investment amount is deducted as a sales charge when the investor buys the fund.
A more thorough explanation:
Definition: Sales load refers to an additional amount added to the price of a security or insurance premium to cover the sales commission and expenses.
For example, if you invest in a mutual fund with a front-end load of 5%, you will pay an additional 5% on top of the fund's net asset value (NAV) to cover the sales commission and other expenses. So, if the NAV of the fund is $10 per share, you will pay $10.50 per share to buy the fund.
Another example is when you buy an insurance policy with a sales load. In this case, a portion of your premium payment goes towards paying the sales commission and other expenses.
These examples illustrate how sales load can increase the cost of investing in securities or buying insurance. It's important to understand the sales load and other fees associated with an investment or insurance product before making a decision.