Assume you are analyzing two separate annuity pools. Pool A has significantly higher mortality (deaths/thousand)than Pool B. Holding other factors constant,which pool will make higher payments per month to each annuitant?
A) A
B)B
C)the monthly liquidation payments will be equal
D)we cannot say, because mortality is not an important factor in calculating annuity payments

Question

Quizplus · Accepted Answer

Annuity payments are calculated based on the mortality experience of the pool. Pool A with significantly higher mortality will have fewer survivors, leading to each annuitant receiving larger payments per month compared to Pool B. Therefore, Pool A will make higher payments per month to each annuitant.

Assume You Are Analyzing Two Separate Annuity Pools