Assume You Are Analyzing Two Separate Annuity Pools

Multiple Choice

Assume you are analyzing two separate annuity pools. Pool A has significantly higher mortality (deaths/thousand) than Pool B. Holding other factors constant, which pool will make higher payments per month to each annuitant?

A) A
B) B
C) The monthly liquidation payments will be equal.
D) We cannot say because mortality is not an important factor in calculating annuity payments.