What does the annuity rate include over the life of the contract?

The annuity rate incorporates various costs incurred by the insurer throughout the life of the contract, including commissions, administrative expenses, and other related costs necessary to manage the policy. This comprehensive approach ensures that the insurer can cover its operational costs while still providing a competitive rate to the policyholder. The inclusion of commissions in the annuity rate reflects the compensation system for agents or brokers involved in selling the annuity contracts, ensuring that those facilitating the sale are adequately rewarded.

By considering all these elements, the annuity rate is structured to be viable for both the insurer and the annuitant over the life of the contract. This allows the insurer to sustain its business model while providing the promised benefits to the policyholders.