Which fee is described as the expense risk fee that is charged against the separate accounts?

• A. Mortality risk (the cost of insurance)
• B. Expense risk fee
• C. Investment management fee
• D. Administrative fee

Answer: (B)

In separate accounts backing variable contracts, several charges are taken from the account to cover different risks and costs. The expense risk fee is the one that compensates the insurer for the risk that actual expenses may exceed what was assumed when the contract was priced. This fee is specifically charged against the separate accounts, not the general account. It’s separate from the cost of insurance (mortality risk), the investment management fee charged by the fund managers, and the administrative fee, which covers other administrative costs. So the described fee is the expense risk fee.