Glossary
Mortality and expense (M&E) charge
An annual variable annuity fee, charged as a percentage of account value, that pays for the insurer's guarantees, sales costs and administration.
Also called: M&E charge, M&E fee, mortality and expense risk charge
The mortality and expense risk charge is a core fee in a variable annuity. The insurer deducts it from the subaccounts daily, stated as an annual percentage of account value. It compensates the insurer for the insurance risks it takes on, such as the basic death benefit guarantee and the promise to annuitize at guaranteed rates, and for costs including commissions and overhead. Variable life insurance carries a similar charge.
The M&E charge is only one layer. A variable annuity's total cost usually combines the M&E charge, an administrative fee, the expenses of the underlying funds in each subaccount, and any optional rider charges. Say, hypothetically, a contract has a 1.25% M&E charge, a 0.15% administrative fee, 0.70% average fund expenses and a 1.00% income rider: the total annual cost is 3.10%, or $3,100 a year on $100,000.
Because the charge applies every year to the whole account, it compounds into a large cost over long holding periods. Compare it across contracts using the fee table in the prospectus, and weigh it against the guarantees you'll actually use. Some variable annuities sold without commissions charge much less. See annuity fees, explained and variable annuities: how they work, what they cost, who they suit.
Last reviewed October 4, 2026