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Old 03-09-2013, 01:48 PM   #101
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Join Date: Nov 2010
Location: Vermont & Sarasota, FL
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Dave's right, there is a lot more that would go into the pricing than just the interest. Acquisition costs, a reasonable contribution to expenses, profit to provide a reasonable return to investors on the capital used by the product, etc. FIRE'd's example would only provide 22 bps of spread.

The other thing is that annuity actuarial tables are different from the tables in the link because there is an anti-selection presumption built into annuity mortality tables (people who buy annuities then to be in good health and have good prospects for a long life and people in poor health don't tend to by annuities).

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