Which set correctly lists charges deducted from the separate account?

Which set correctly lists charges deducted from the separate account?

• A. Mortality expense; Expense risk fee; Investment mgmt fee
• B. Admin fees; Sales load; State prem taxes
• C. Mortality expense; Admin fees; Investment mgmt fee
• D. Sales load; Expense risk fee; State prem taxes

Answer: (A)

In a variable annuity, the separate account holds the invested assets and the charges tied to those investments and the insurer’s risk are taken directly from that account. The three charges that come out of the separate account are the mortality expense (the portion covering the insurer’s mortality risk), the expense risk fee (the broader mortality and expense risk charge), and the investment management fee (the cost of managing the sub‑accounts). Other items listed—admin fees, sales loads, and state premium taxes—are not deducted from the separate account. Admin fees and state premium taxes are typically charged differently (often to the insurer’s general account or separately), and sales loads are paid as a front-end or back-end charge, not directly subtracted from the separate account value.

In a variable annuity, the separate account holds the invested assets and the charges tied to those investments and the insurer’s risk are taken directly from that account. The three charges that come out of the separate account are the mortality expense (the portion covering the insurer’s mortality risk), the expense risk fee (the broader mortality and expense risk charge), and the investment management fee (the cost of managing the sub‑accounts).

Other items listed—admin fees, sales loads, and state premium taxes—are not deducted from the separate account. Admin fees and state premium taxes are typically charged differently (often to the insurer’s general account or separately), and sales loads are paid as a front-end or back-end charge, not directly subtracted from the separate account value.