What is a mortality and expense (MandE) risk charge?

A mortality and expense (MandE) risk charge is specifically designed to cover the insurer’s costs associated with providing the death benefit and the administrative expenses incurred in managing the policy. This charge is typically deducted from the premiums paid by policyholders and is a critical component in the pricing of variable life insurance products. It helps ensure that the insurer can meet its obligations, such as paying out death benefits when the insured passes away, while also covering the operational costs associated with policy administration, like customer service and record-keeping.

Understanding this charge is essential for anyone engaging with variable life products, as it directly impacts the growth of the policy’s cash value and overall performance. The MandE charge can vary among different insurance products and companies, influencing the attractiveness of the policy in the context of long-term financial planning.