How Are Life Annuities Calculated? 
Assuming you mean annuities that payout a guaranteed income over your lifetime , heres basic explanation . An annuity is a mortality insurance product with two basic moving parts : the company crediting rate to your annuity and the mortality credits based on age . The crediting rate is a result of the portfolio return and the company keeping a portion of that return for profit margin . A mortality credit is an underwriting assessment based on life expectancy . The older you are the greater the size of the credit . The combination of the credited interest rate and mortality credit make up your life time payment . 