When selecting a settlement option on a variable annuity, the life expectancy table is used to calculate the amount of the first monthly payment.
Whenever a variable annuity is annuitized, the first payout is computed using the AIR as the interest rate, just as it would be if the contract were a fixed annuity. The type of payout option chosen as well as the annuitant's life expectancy as calculated by the standard life expectancy table are also taken into account in the computation.
The performance of the separate account relative to the AIR will then determine the number of subsequent payments.
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