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My bad... I completely missed the "VUL" in the original post.Thank you for the info. I understand why it would be on an annuity but life insurance already calculates in those risks of early death via COIs and other costs just like all life policies. It was just that it is a unique charge on variable life.
If I remember correctly, I ask the life product consultant the same question. The M&E for VUL is built in as a buffer for carriers to absorb loss.
I am guessing it is related to the transaction costs among different sub account funds, especially if they have built in re-re-balancing. The sub accounts (different funds) expenses are not inclusive with the M&E. You will actually not see them as a separate line items in illustration. They will however show up in the prospectus.
Hope I am correct with my information.