How this number is made
This is a fixed annuity you could build yourself: a lump sum pays a constant amount for a set number of years and then it is gone. An insurance annuity’s quote includes the insurer’s margin and may include a lifetime bet this page does not make.
- The rate is what the remaining balance earns.
- Years are how long the payments last, not your lifespan.
Formula
Payment = principal × r ÷ (1 − (1+r)^−n), with r the monthly rate and n the months.
Worked example
With the figures already in the form, payment per month is $1,514.95.
Questions
Is this what an insurer will pay?
Usually less, because the insurer keeps a margin and may promise a lifetime payment. Use their quote for their contract. Use this page to see the math without the margin.
What happens after the last year?
The balance is zero. There is no lifetime guarantee here.