L&HPennsylvaniamedium
On a variable annuity sold in Pennsylvania, the 'M&E' charge compensates the insurer for which two risks?
AMarket timing by contract holders and trade execution costs incurred when reallocating sub-account funds
Mortality (annuitization guarantee) and Expense (administrative cost guarantee)
CMaintenance and equity
DMedicare and excise
Why this is the answer
The mortality and expense (M&E) risk charge on a variable annuity covers two distinct risks the insurer accepts: the mortality risk that the annuitant lives longer than projected once payout begins, and the expense risk that contract administration costs will exceed the levels assumed when the contract's expense charges were set.
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