Fixed Annuities Cincinnati
Life Expectancy and Annuities
When insurers calculate the amounts they are willing to pay out for annuity benefits, many factors come into play. One of these factors is the life expectancy of the annuitant.
- Assuming two individuals with the same size annuity and the same age, a female annuitant will receive a lower yearly benefit amount due to the fact that women have a longer life expectancy than men.
- A 70 year old man who chooses a Life Annuity payout option will receive a higher benefit amount than a 60 year old man who has the same size annuity.
Other factors contributing to the amount of benefit paid out by an annuity are company expenses and investment returns. One insurance company’s investment portfolio may outperform (or underperform another company) thereby affecting payout amounts. Further, operating expenses can play a part in calculating benefit amounts. An insurer with higher operating expenses may yield lower benefit amounts to annuity beneficiaries.
Recently, many insurance companies have become exposed to other forms of adverse risk due to the types of investments they have made in the past. Many insurers are invested in mortgages, commercial real estate and other equities that have experienced compressed value in recent years. All of these factors combined can have an effect on the amount of benefit an insurer is willing to pay for a given annuity at a given starting date.