YOU ASK:
What is the definition of Gross Annuity Cost?
WE ANSWER:
The Gross Annuity Cost refers to the cost of the annuity - the monetary amount that is equal to the present value of all of the annuity's income payments, with a special consideration and provision for expense loading.
This is different from the net annuity cost, since the gross annuity cost is calculated on a gross basis, meaning all expense loadings such as commissions, administration costs, and fund administration fees are included in the costing.
Annuity costs are based on a variety of factors - the amount the annuitant is willing to pay for as premiums, the amount of income payments the annuity issuer will pay the annuitant for the duration of his life, as well as the costs of paying and administering the annuity over the years.
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