Mortality And Expense Risk Fees
What Does Mortality And Expense Risk Fees Mean?
Mortality and expense risk fees are variable yearly charges included in some annuities or insurance policies as a means to compensate the provider for the extra risks assumed. An insurance company may charge this fee for an 80-year-old applicant due to the increased risk of death, while it would be unlikely for them to charge the fee to a healthy 25-year-old.
Insuranceopedia Explains Mortality And Expense Risk Fees
Averaging at about 1.25%, mortality and expense risk fees often range from 0.40 to 1.75% annually. The “mortality” portion is based on the risk of the insured dying while the account balance is less than the amount of the premiums paid minus any withdrawals, while the “expense” portion covers the costs of other insured features.