Dale: 

The insurer assumes you will someday lifetime annuitize your corpus.  Due to this assumption the insurer charges you during the accumulation period for taking on the risk that you will live longer than your life expectancy.  The fee would be higher if they guaranteed you a return of premium death benefit.  During the annuitization phase the charge is factored into the annuity income rates.  I trust this helps.

Joel L. Frank

Pension Columnist

The Chief-Civil Service Leader

277 Broadway

NYC 10007