This is the mortality and expense (M&E) risk charge, which is the percentage of the subaccount's assets that the insurance company deducts to cover costs associated with mortality and expense risk. Specifically, it can serve as a source of profit for the insurance company in addition to compensating the company for offering features such as the variable-annuity death benefit and for compensation. The typical M&E charge for variable annuities runs at about 1.25%. Mortality and expense risk charges tend to be much lower for variable-life because they also deduct the cost of insurance from premiums. The typical variable-life M&E risk charge is 0.90%. If the subaccounts in the contract have different M&E risk charges, then the M&E risk charge for the contract will appear as Multiple.
Benefits
Because M & E charges can be high and vary greatly, investors should note the charges associated with the contract prior to investing.
Origin
This information is taken directly from the insurance contract's prospectus.