Mortality and expense risk charge, often abbreviated as M&E charge, is a fee assessed in variable annuities and some variable life insurance contracts to compensate the insurer for assuming mortality risks, guaranteed benefits, and certain expenses. The mortality component covers the risk that annuitants or insureds live longer than expected or that death benefits exceed projected levels, while the expense component helps pay for administrative and sales-related costs. M&E charges are typically expressed as an annual percentage of the separate account value and deducted daily. They are separate from underlying fund management fees and any additional rider charges. Understanding the mortality and expense risk charge is important for evaluating the true cost of variable products and comparing them to fixed annuities, mutual funds, or other investment and income solutions.

In practice, advisors discuss mortality and expense risk charges when explaining the fee structure of variable annuities and variable universal life policies. Prospectuses and illustrations disclose the M&E charge alongside fund expenses, surrender charges, and rider fees, but clients may need help interpreting how these charges affect long-term returns. Advisors often compare products with different M&E charges to demonstrate the impact of fees on accumulation and income projections. Regulators emphasize clear disclosure of M&E charges in suitability and best interest reviews, especially for older contracts with higher fee levels. During policy reviews, producers may recommend exchanging or repositioning high-cost variable products into more efficient solutions if the mortality and expense risk charge and other fees significantly erode value relative to client goals and available alternatives.