Annual Administrative Fee

What Does Annual Administrative Fee Mean?

An annual administrative fee, in the context of insurance, is a charge imposed by insurance companies to manage group insurance plans, typically employee group insurance plans. These fees ensure that the insurance plan can adequately cover mortality costs and other expenditures. Members of the group insurance plan are guaranteed payouts for death benefits and weekly payments in situations where they are needed.

Insuranceopedia Explains Annual Administrative Fee

To further explain annual administrative fees, it is essential to understand the various costs associated with maintaining these plans. The insurance company incurs expenses ranging from printing materials to shipping them, among many others. Administration fees are designed to cover these significant costs associated with managing a group plan.