What does a straight life annuity depend on primarily?

A straight life annuity primarily depends on the life expectancy of the annuitant because the payments from the annuity are structured to last for the lifetime of the individual. The insurance company calculates payouts based on the average life expectancy of individuals within the same demographic group as the annuitant. This means that the longer an individual is expected to live, the larger the average payments will need to be, as the insurer must account for the risk of making payments for an extended period.

While market conditions, interest rates, and the economic climate can influence the pricing and demand for annuities, the fundamental basis of a straight life annuity's payment structure is intimately tied to how long the annuitant is expected to live. This primary focus on life expectancy ensures that the annuity provides a consistent income stream until the end of the annuitant's life, reflecting the insurance principle of pooling longevity risks among many policyholders.