1. What is a Deferred Life Annuity?

A deferred life annuity is a financial product that provides guaranteed periodic payments starting at a future date, continuing for the annuitant's lifetime. The payments are calculated based on the principal amount, interest rate, deferral period, and actuarial life expectancy factors.

2. How Does the Calculator Work?

The calculator uses the deferred annuity formula:

Where:

• \( PMT \) — Periodic payment amount (USD)
• \( PV \) — Present value or principal amount (USD)
• \( r \) — Interest rate per period (decimal)
• \( d \) — Number of deferral periods (years)
• \( \text{Actuarial Factor} \) — Mortality-based factor (unitless)

Explanation: The formula accounts for both the time value of money during the deferral period and the annuitant's life expectancy.

3. Importance of Deferred Annuity Calculation

Details: Accurate calculation helps in retirement planning, comparing annuity products, and understanding guaranteed income streams in later life.

4. Using the Calculator

Tips: Enter present value in USD, interest rate as decimal (e.g., 0.05 for 5%), deferral periods in years, and actuarial factor from mortality tables. All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between immediate and deferred annuities?
A: Immediate annuities start payments right away, while deferred annuities have a waiting period before payments begin.

Q2: Where do I get actuarial factors?
A: Actuarial factors come from mortality tables and are typically provided by insurance companies or annuity providers.

Q3: How does interest rate affect payments?
A: Higher interest rates during the deferral period result in larger periodic payments.

Q4: Are these payments guaranteed?
A: Payments are typically guaranteed by the insurance company, subject to their claims-paying ability.

Q5: Can I change the payment frequency?
A: Payment frequency (monthly, quarterly, annually) would require adjusting the calculation accordingly.