What is the term for the fee charged for professional investment advice in a variable contract?

What is the term for the fee charged for professional investment advice in a variable contract?

• A. Administration fee
• B. Surrender charge
• C. Investment management fee
• D. Management fee

Answer: (C)

The key idea here is the fee that pays for the professional investment guidance and ongoing management of the subaccounts inside a variable contract. This is called the investment management fee. It compensates the person or team that selects and monitors the investments within the contract, rather than handling administrative tasks or penalizing early withdrawals. Administration fees cover recordkeeping and contract maintenance, surrender charges apply to early withdrawals, and while some firms use related terms like management fee, the specific charge for investment advice and ongoing management is the investment management fee.

The key idea here is the fee that pays for the professional investment guidance and ongoing management of the subaccounts inside a variable contract. This is called the investment management fee. It compensates the person or team that selects and monitors the investments within the contract, rather than handling administrative tasks or penalizing early withdrawals. Administration fees cover recordkeeping and contract maintenance, surrender charges apply to early withdrawals, and while some firms use related terms like management fee, the specific charge for investment advice and ongoing management is the investment management fee.