To estimate a joint-life annuity rate?

FatherAbraham

Can anyone suggest a method for estimating joint-life annuity rates?

It's fairly easy to get an indication for "standard" couples, where, for example, the second life is three years younger than the principal insured -- these can be found for various principal-life purchase ages. At 65, a joint-life, index-linked annuity might yield 2.8%, when the second life is three years younger.

However, I need to estimate the rates when the second life is ten years younger, not three years younger (or some other differential).

Does anyone have a plausible rule-of-thumb which helps understand how the second life affect the overall annuity rate?

(Even if one doesn't want to buy an annuity, annuity rates give a useful feel for the cost/risk of providing income for the rest of an insured life).

Thanks,
FA

jamesd

Given cohort life expectancies, a three year age difference would correspond to about a five year difference in expected age at death. That suggests getting the payout for an annuity with no spouse and subtracting twice the difference between it and the three year difference annuity.

This is unlikely to be entirely accurate because the ages affect mortality rates. That in turn implies that the deduction will be too low due to the lower death rate in the early part of the ten years, meaning higher payout requirements.

sandsy

I don't know any rules of thumb.
But if you can find a pension calculator where
a) the spouse's details are input
b) the projected fund is provided, and
c) the projected annuity income is provided

you can work backwards to estimate the annuity rate, especially if the assumptions state the expense allowance for annuity purchase.

mc4924

At moneyadviceservice dot org dot uk there is a comparison service for annuities where you can specify the age of the spouse/dependant (and many other details).

Follow "Tools and resources" and then "comparison tables" (sorry I cannot post links as I am a new poster on this forum)

FatherAbraham

mc4924 wrote: »

At moneyadviceservice dot org dot uk there is a comparison service for annuities where you can specify the age of the spouse/dependant (and many other details).

Follow "Tools and resources" and then "comparison tables" (sorry I cannot post links as I am a new poster on this forum)

Oh wow, thanks, that was just what I wanted!

An indicative annuity-quote which both takes account of second-life data-of-birth, and permits annuity deferral (i.e. one can get quotes out of it before the main life insured is 55).

Here's the link which you wanted to post: http://pluto.moneyadviceservice.org.uk/annuities

Warmest thanks,
FA