Example
With a $200,000 balance, 4% annual rate, 20-year term and monthly payments, the estimated payout is about $1,212 per month before taxes, fees or insurer-specific rules.
Common mistakes
Do not compare this directly with a life annuity quote. A life annuity can include mortality credits, guarantees and insurer pricing that this fixed-term formula does not model.
Important limitations
This is a mathematical payout estimate, not an annuity quote. Real annuity income can depend on insurer pricing, mortality credits, rider fees, surrender periods, inflation adjustments, tax treatment and whether income is guaranteed for life or for a fixed period.
How to interpret the result
The payout is higher when the term is shorter or the assumed return is higher. If the rate is uncertain, compare several rates because payout plans are sensitive to sustained low returns.
Last reviewed: 2026-05-17