The distribution charge is intended to compensate the insurance company for a portion of its acquisition expenses under the Annuity, including promotion and distribution of the annuity and costs associated with its offering. The distribution charge is typically deducted against the contract holders' annuity account value.
Benefits
Investors should note both the raw expense figures, as well as expense trends that might indicate if a subaccount is becoming more or less expensive to hold.
Origin
This information is taken directly from the insurance contract’s prospectus.
For the Pros
The administration charges, distribution charges, and M&E risk charges together make up the total insurance expense for a contract.