Which fee represents the mortality risk (the cost of insurance) deducted from the separate accounts?

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

Answer: (A)

The fee reflecting the insurer’s cost of providing life insurance guarantees is the mortality risk charge. In variable contracts, this mortality cost (often called the cost of insurance) is deducted from the contract’s separate accounts to cover the risk the insurer bears for the death benefit. It’s a component of the overall mortality and expense (M&E) charge, distinct from investment management fees (to manage the sub-accounts’ investments) and administrative or expense risk fees (the latter covering potential additional costs and uncertainties). So the specific cost tied to mortality risk is the mortality risk (cost of insurance) fee.