L&HOhiomedium
Within an Ohio-issued variable annuity, the mortality & expense risk (M&E) charge is most accurately characterized as:
AA federal excise tax imposed by the IRS on all annuity income distributions received by the contract owner during the accumulation phase
An asset-based fee deducted from sub-account value that compensates the insurer for mortality guarantees and operating expenses
CA surrender charge assessed only at contract termination
DA premium tax remitted to ODI
Why this is the answer
M&E is deducted daily from the net asset value of the variable annuity sub-accounts, similar to a mutual-fund expense ratio. It compensates the insurer for assuming mortality risk (the death-benefit guarantee) and for general operating expenses, and is distinct from front-end loads, surrender charges or premium taxes.
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