Step 2, Sub-Step b - Life Expectancy Figure

The next step to determining whether an annuity is actuarially sound is to determine the appropriate life expectancy figure.

Definition: The average number of years of life remaining at a given age or the average expected lifespan of an individual. This figure can vary depending on the criteria used to determine the life expectancy.

Follow these three steps to determine the appropriate life expectancy figure:

a. Determine Whose Life Expectancy to Use.

b. Determine Person’s Age.

Use the age of the appropriate person (which you just determined in the previous step) on the date of annuitization. Calculate the age on the date of annuitization based on that date and the date of birth of the person whose life expectancy you are using.

c. Find the SSA Period Life Table Figure.

Example:

Stephanie is requesting MA-LTC. She is the owner and payee of an immediate annuity she purchased 13 months ago when she was 63 years of age. The cash value of annuitized funds was $82,000. Stephanie receives a $500 payment each month, which she has received for 12 months and expects to receive for life. The annual payment amount is $6,000. (12 months X $500/month)

Action:

Use the life expectancy figure of 22.32 based on Stephanie’s age (63) on the date of annuitization because she is the payee of her annuity.

Page 5

Transfer Evaluation - Actuarially Sound Determination

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