Expenses
Subaccount Expenses
Fund Expense %: The percentage of assets deducted each year for underlying fund operating expenses, management fees, and all other asset-based costs incurred by the fund, excluding brokerage fees. Like insurance expenses, fund expenses are reflected in the subaccount's AUV.
Insurance Expense %: The percentage of subaccount assets deducted each year to cover M & E risk charges, and other miscellaneous administration fees.
M&E Risk %: 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%.
Total Expenses %: This figure combines the subaccount's fund expense ratio and insurance expense.
Contract Expenses
Annual Contract Charge: Expressed in dollars and percentages, this is the yearly fee charged to compensate the insurance company for the cost of maintaining and administering the variable account. Investors should note that because this charge is deducted by cashing annuity units, it is not reflected in the AUV or in the total return of the subaccount. The charge normally applies only during the contract's accumulation, not during its annuity phase. Unlike VAs, VL contract charges are deducted from monthly premium payments prior to investment.
Maximum Surrender Charge: The maximum charge that can be levied by the insurance company when an investor withdraws his or her money before an account's maturity date (or annuitization date).
Years Applied: For subaccounts with surrender charges, this is the number of years the charges are applied.
Rolling (Y/N): A rolling surrender charge is a charge levied on any additional investments to a variable-product investment. Where a dash appears, there is no surrender charge. An "N" indicates no rolling charge, and an "R" indicates a rolling charge.
Front Load %: The front-end load, or front-end sales charge, is assessed by the insurance company on the investor's initial contribution. For variable annuities, front-end loads are unusual. Most insurance companies prefer to assess a surrender charge instead. The variable annuity with a front-end load is at a disadvantage because less of the investor's initial contribution will be put to work. For variable life, the front-end load is deducted from premium payments, usually as a portion of the guideline or target premiums. Unlike VAs, however, variable-life policies often employ both front-end loads and surrender charges. Typically, the front-end load consists of a sales charge intended to defray the insurance company's contract-creation expenses, such as underwriting, brokering, and marketing the contract. Occasionally, the front-end load can include an administration or issue charge--usually expressed as a flat dollar amount. The front-end load listed here does not include charges for premium taxes.
Purchase Information
Minimum Investments
Initial (Q)
Initial (NQ)
Listed for both qualified and non-qualified accounts (as denoted by Q, and NQ), this is the minimum dollar amount required to invest in a variable-annuity contract. Typically, the minimum amount to purchase a contract will differ for qualified and nonqualified accounts.
Qualified vs. non-qualified accounts Under a qualified plan, an investor may invest in the variable annuity with pretax dollars through an employee pension plan, such as a 401(k) or 403(b). Money builds up on a tax-deferred basis, and when the qualified investor makes a withdrawal or annuitizes, all contributions received are taxable income. A nonqualified account, on the other hand, is available only for after-tax dollars. Once again money builds up tax-deferred, but upon annuitization only the gain, not the initial investment, is taxable income.
Correspondence Information
This is the name, address, and phone number of the insurance company to which you can write or phone for additional information.
Management
Subaccount Inception Date
The subaccount inception date gives the date on which the subaccount commenced operations.
Manager Name
The portfolio manager is the individual or individuals responsible for the overall fund strategy, as well as the buying and selling decisions of the securities in a fund's portfolio. Management teams may consist of many people, but if one manager is considered a central figure or lead manager, that individual's name will be printed. We also note the manager's tenure at the helm of the fund.
Manager Tenure
The number of years which the manager has been running the day-to-day operations of the underlying fund.
Fund Name
The name of the underlying fund.
Advisors
This is the company that or companies that are given primary responsibility for managing the underlying fund.
Subadvisors
In some cases, the advisor employs another company, called the subadvisor, to handle the underlying fund's day-to-day management. In these instances, the portfolio manager generally works for the underlying fund's subadvisor, and not the advisor.