Which of the following charges is deducted from the premium of a variable product?

• A. Admin fees
• B. Mortality expense
• C. Investment management fee
• D. Expense risk fee

Answer: (A)

In variable contracts, charges can be taken at different points—some from the premium upfront and others from the ongoing account value. Administrative fees are typically deducted from the premium itself to cover the insurer’s issuing and ongoing administrative costs. The other charges—mortality expense, investment management fee, and expense risk fee—are generally assessed against the policy’s account value over time, reducing the value of the investment rather than taking money directly from the premium at purchase. So the administration fee is the one that’s deducted from the premium.