Calculator Inputs
Formula Used
The calculator converts the annual discount rate into an effective rate per payment period. It also converts the annual payment growth rate into a per-payment growth rate.
Remaining life years = max(0, longevity age − current age)
Effective payout years = max(remaining life years, guarantee years)
Total payments = effective payout years × payments per year
Effective discount per payment = (1 + annual discount rate / compounding periods)compounding periods ÷ payments per year − 1
Effective growth per payment = (1 + annual growth rate)1 ÷ payments per year − 1
Payment in period k = periodic payment × (1 + effective growth per payment)k − 1
PV contribution in period k = payment in period k ÷ (1 + effective discount per payment)deferral periods + timing offset
Present value = sum of all discounted payment contributions
Timing offset equals k for end-of-period payments and k − 1 for beginning-of-period payments.
How to Use This Calculator
- Enter the payment amount you expect each payout period.
- Provide current age and the age to which payments may continue.
- Set discount rate, payment growth rate, and payment frequency.
- Choose the compounding frequency that matches your valuation method.
- Enter any deferral period before payouts begin.
- Add guarantee years if a minimum payout term applies.
- Select whether payments arrive at each period’s end or beginning.
- Submit the form to view present value, payout totals, and schedule preview.
Example Data Table
| Periodic Payment | Current Age | Longevity Age | Discount Rate | Growth Rate | Payments/Year | Compounding/Year | Deferral | Guarantee | Timing | Present Value |
|---|---|---|---|---|---|---|---|---|---|---|
| $1,200.00 | 65 | 88 | 5.00% | 2.00% | 12 | 12 | 0 years | 10 years | End of period | $238,322.57 |
Frequently Asked Questions
1. What does present value mean for a life annuity?
Present value is today’s lump-sum equivalent of future annuity payments after discounting them for time, rate assumptions, payment timing, and payout duration.
2. Why do I enter current age and longevity age?
Those inputs estimate remaining payout years. The calculator uses the gap between them unless guarantee years are longer.
3. What is the guarantee period used for?
Guarantee years create a minimum payment term. If expected life years are shorter, the guaranteed term becomes the valuation length.
4. What is the difference between ordinary and due timing?
Ordinary timing assumes payments occur at each period’s end. Due timing assumes payments occur at each period’s beginning, which usually raises present value.
5. Why is compounding separate from payment frequency?
A discount rate may compound on a schedule different from payout timing. Separate inputs improve valuation when quoting monthly payments with quarterly or annual compounding.
6. How does the growth rate affect the result?
Growth increases future payments each period. Higher growth usually raises present value, especially when discounting is low or payments last many years.
7. Does this calculator use actuarial survival tables?
No. It uses user-entered life assumptions, guarantee years, and timing settings. For formal pricing, pair results with actuarial mortality models.
8. What do the CSV and PDF downloads include?
They include the calculated summary and the full payment schedule, making it easier to review, share, archive, or compare assumptions.