Which item is not a charge assessed against the separate account?

Which item is not a charge assessed against the separate account?

• A. Mortality expense
• B. Expense risk fee
• C. Investment mgmt fee
• D. Admin fees

Answer: (D)

Understanding how charges are allocated in a variable annuity is key. The separate account holds the underlying investment options and is insulated from the insurer’s general account. Fees that reduce the value of the separate account are the mortality and expense risk charge and the investment management fee, as these are tied to the contract’s investment and insurance risks within the separate account. Administrative fees are administrative costs charged by the insurer to maintain the contract and are typically taken from the insurer’s general account, not from the assets in the separate account. So, admin fees are not a charge assessed against the separate account.

Understanding how charges are allocated in a variable annuity is key. The separate account holds the underlying investment options and is insulated from the insurer’s general account. Fees that reduce the value of the separate account are the mortality and expense risk charge and the investment management fee, as these are tied to the contract’s investment and insurance risks within the separate account. Administrative fees are administrative costs charged by the insurer to maintain the contract and are typically taken from the insurer’s general account, not from the assets in the separate account. So, admin fees are not a charge assessed against the separate account.