What is an annuity factor?

Annuity factor is a number that can be used to calculate the current value of future payments from annuity. The picture is based on an annuity that pays $ 1 (USD) for each payment period. This number is then multiplied as needed to make the data for the actual annuity. In most cases, this period is the rest of the buyer's life. This means that the one -time amount and payment will usually depend on the age, gender and health of the buyer. The most common use of annuity is to provide a pension. In many countries, the money saved on retirement must be spent on the annuity within the rules that allow these savings to be tax -deductible. This is because this value depends on the sessionship between the flat rate, the income paid from the annuity and the period it runs for. This comparison can be facilitated through the annuity factor.

someone comparing different annuity offers can consult a table of current values ​​andnits. This compares the number of payments that will be made with the share, each payment is a lump sum. In fact, this second issue is the equivalent interest that Annuity holder receives for their initial investment (although unlike most investments, he will not receive the original flat -rate amount).

Annuity factor table of the current value shows a suitable annuity factor. This can then be multiplied by payment to show how much future payments will be to the buyer. This will help the buyer to decide whether the annuity is the best solution.

One limitation of the annuity factor is that it is required to know how long the annuity payments will receive. With the fixed term of the annuity, this is not a problem, but with the one that runs for the rest of their lives, they will have to predict their remaining life. Consultation with an annuity table of facts can often show that the annuity that offers the best value if the buyer dies after several years may not be the best variant of value if they live longer DObu.