What do mortality and expense charges in Variable Life Insurance cover?

Mortality and expense charges in Variable Life Insurance are primarily designed to cover the cost of insurance and administrative expenses associated with maintaining the policy. These charges serve two main functions:

1. Cost of Insurance: This portion of the charge is used to provide the death benefit coverage that the policyholder receives. Since Variable Life Insurance provides a death benefit that varies based on the performance of the underlying investments, the insurer must calculate the risk and cost of providing that coverage, which can change over time due to the policyholder's age and health status.

2. Administrative Expenses: This component helps cover the operational costs incurred by the insurance company for managing the policy. This includes expenses related to policy administration, record-keeping, customer service, and other overhead costs associated with running the insurance policy effectively.

These charges are essential for the insurer to ensure that the policy remains in force while providing the required benefits to the policyholder.