Variable annuity fees fall into the following five categories.

1. Mortality expenses (M&E)
   This is a fee charged by the insurance company to provide you with a death benefit (often just a guarantee to pay out to your beneficiaries at least what was put in). This variable annuity fee can range from .50 – 1.5% of the policy value per year.
2. Administrative expenses
   Many variable annuity policies have a separate administrative fee to cover the cost of mailings and ongoing service. This fee can range from .10 - .30% of the policy value per year.
3. Investment expense ratio
   Inside a variable annuity, the underlying stock and bond investment choices, called sub-accounts, will have an investment management fee which can range from .25 – 2.00% of the value in that account per year.
4. Additional cost of riders
   Riders are extra features on your variable annuity policy that provide you with additional guarantees or death benefits. Depending on the extent of the benefit, riders can cost .25 – 1.00% of the policy value per year.
5. Surrender charges
   Many policies pay an upfront commission to the person who sells the policy to you. A surrender charge is put on the variable annuity policy so that if you cancel the policy early, the insurance company can thus recoup the commission they had to pay out.