Mortality And Expense Risk Fees

What Does Mortality And Expense Risk Fees Mean?

Mortality and expense risk fees are variable annual charges included in some annuities or insurance policies to compensate the provider for the additional risks they assume. For example, an insurance company may impose this fee on an 80-year-old applicant due to the higher risk of death, whereas it is unlikely they would charge it to a healthy 25-year-old.

Insuranceopedia Explains Mortality And Expense Risk Fees

Averaging around 1.25%, mortality and expense risk fees typically range from 0.40% to 1.75% annually. The “mortality” portion is based on the risk of the insured dying when the account balance is lower than the total premiums paid, minus any withdrawals. The “expense” portion covers the costs associated with other insured features.