How Do I Calculate The Present Value Of An Annuity?
The present worth of a guaranteed annuity is that of the future payments received from an insurance policy, at a specified rate of interest, or a specified discount rate. The present worth of annuities is determined as it was when the insurance was purchased. You can calculate the present worth of your annuities with the aid of a formula called PVA. There are many factors affecting the present worth of your annuities and they include the insurance company, the age of the insured person, the time period for which the annuities are insured, your occupation and your medical history. The present worth of annuities depends upon your age at the time of purchase, the amount of premium paid, if any, and your occupation.
The present worth of an insurance annuity depends upon the discount rate of interest on which it is based and the payment value you receive upon the surrender of the policy. High the discount rate, lower the present worth of the annuities. You can take a present worth calculation to decide whether you will receive a larger amount in a lump sum at present or annuities spread over several years by taking annuities now.
The present worth of an insurance annuities is equal to the cash value you receive upon surrendering the policy plus the difference between the cash value and the insurance policy’s total risk premium. If you surrender your annuities before maturity you will not lose any of your cash value. However, you will lose all the interest you have earned on the total premiums you paid for your annuities. Thus if you surrender your annuities before maturity the cash value you receive upon surrendering will be less than the cash value at maturity.
The future payment value is equal to the present worth of a single annum at the time of surrendering the annuities. The present and future payment values of annuities are different from each other. At surrendering, a policyholder does not receive a single album and instead he or she receives two payments in two payments. The present worth of these two payments will be equal to one album at the surrendering time and the future payment value will be equal to the total of the two payments. This will make it possible to get one album in two payments at a later date after surrendering.
The payment value is also known as the accumulated cost. This is the cost of paying the insurance premium at the time of surrendering. It is equal to the total cost of paying the premium multiplied by the number of the annuitant and the period in which you surrender. The payment value can be calculated for each album by taking into consideration the premium paid, the period and the age of surrendering.
The present worth of an insurance annuity includes the present and future payment values of your annuities and the total of all the payments. Thus, if you surrender your annuities, you will receive the amount of cash value and the payments will be equal to the payments at the time of surrendering.