How To Calculate Fixed Annuity?

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    David G. Pipes, CLU®, RICP®
    Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
    Only insurance companies write annuities.  An annuity is calculated based upon the life expectancy of the annuitant. The number of annuitants who make it to the next year is fairly high, the following year, somewhat fewer and so on until you reach life expectancy.  At that point half of the annuitants will have died.  Then the mortality tables illustrate that every year the percentage of survivors will be reduced significantly and the number who die will accelerate.  However. some will make it to 110 but that is all in the actuarial calculation. Spreading the risk over many lives allows the insurance company to make accurate projections of the amount of money they will need to provide the promised benefit.
    Answered on August 19, 2014
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