Annual Administrative Fee

Published: | Updated: August 29, 2016

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Definition - What does Annual Administrative Fee mean?

An annual administrative fee, in the context of insurance, is an annual fee that insurance companies charge to maintain group insurance plans, generally employee group insurance plans. These fees make sure that the insurance plan is able to cover mortality and expenditures. Those in the group insurance plan will be promised payouts for death benefits and weekly payouts if a situation arises where it is needed.

Insuranceopedia explains Annual Administrative Fee

To further explain annual administrative fees, one must understand what fees are necessary to maintain these plans. There are fees the company pays from printing out materials to shipping them to much more. Administration fees are designed to cover the significant costs of administering a group plan.

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