What is Mortality Credits?
Mortality credits are the extra income that people who live longer effectively receive from those in the same annuity pool who die earlier. They are the reason a lifetime income annuity can pay more than you could safely withdraw on your own.
How Mortality Credits Work
When you buy a lifetime income annuity, your premium joins a large pool, and the insurer guarantees income to everyone for life. Because not everyone lives to the same age, the funds left behind by those who pass earlier help support payments to those who live longer. That subsidy is the mortality credit.
This pooling is unique to insurance. No bond or CD can replicate it, which is why immediate annuities and other annuitized income can deliver higher guaranteed payouts than a self-managed portfolio at the same age.
Why Mortality Credits Matter
Mortality credits grow with age, so the older you are when income begins, the larger the boost. It is the core mathematical advantage behind lifetime income, and a key reason annuities exist at all.
