Which set correctly lists charges deducted from the premium?

Which set correctly lists charges deducted from the premium?

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

Answer: (A)

When you pay a premium for a variable annuity, some charges are taken out right away from that premium. Admin fees, a front-end sales load, and state premium taxes are typically deducted from the premium itself. The sales load funds the salesperson’s compensation, and state premium taxes are regulatory charges passed through with the premium; admin fees cover issuing and processing costs. Because these are taken from the initial premium, they reduce the amount actually invested in the contract. In contrast, the other charges—mortality expense, expense risk fee, and investment management fee—are assessed against the contract’s value over time. They reduce the account value as fees accrue, not the initial premium paid.

When you pay a premium for a variable annuity, some charges are taken out right away from that premium. Admin fees, a front-end sales load, and state premium taxes are typically deducted from the premium itself. The sales load funds the salesperson’s compensation, and state premium taxes are regulatory charges passed through with the premium; admin fees cover issuing and processing costs. Because these are taken from the initial premium, they reduce the amount actually invested in the contract.

In contrast, the other charges—mortality expense, expense risk fee, and investment management fee—are assessed against the contract’s value over time. They reduce the account value as fees accrue, not the initial premium paid.