When an annuity is written, whose life expectancy is taken into account?

When an annuity is established, the life expectancy considered in the process is that of the annuitant. The annuitant is the individual whose life duration is being insured and upon whose life the payments are based. This is crucial because the insurance company calculates the expected payout and premium of the annuity based on the annuitant's life expectancy.

A longer life expectancy generally means that the annuity will provide payments over a longer period, potentially leading to higher payouts, whereas a shorter life expectancy could result in lower overall payments. Therefore, accurately determining the annuitant's age and health status is essential for the proper structuring of the annuity.

The beneficiary does not play a role in the calculation for the annuity itself; rather, they receive benefits typically only after the annuitant's death if applicable. The owner is primarily concerned with the ownership and management of the annuity and may not necessarily be the one whose life expectancy is measured. Finally, the idea that life expectancy is not a factor is incorrect, as it is fundamental to how annuities function.