Enter the lump-sum premium ($), the monthly benefit ($), and the life-expectancy period (months) into the Annuity Exclusion Ratio Calculator. The calculator will evaluate and display the Annuity Exclusion Ratio. 

Annuity Exclusion Ratio Formula

The following formula is used to calculate the Annuity Exclusion Ratio. 

AER = LS / (MB * LE)
  • Where AER is the Annuity Exclusion Ratio
  • LS is the lump-sum premium ($) 
  • MB is the monthly benefit ($) 
  • LE is the life-expectancy period (months) 

To calculate the annuity exclusion ratio, divide the lump sum premium by the product of the monthly benefit and the life-expectancy period.

How to Calculate Annuity Exclusion Ratio?

The following example problems outline how to calculate Annuity Exclusion Ratio.

Example Problem #1

  1. First, determine the lump-sum premium ($).
    • The lump-sum premium ($) is calculated to be : 100,000.
  2. Next, determine the monthly benefit ($).
    • The monthly benefit ($) is measured to be: 560.
  3. Next, determine the life-expectancy period (months).
    • The life-expectancy period (months) is found to be: 200.
  4. Finally, calculate the Annuity Exclusion Ratio using the formula above: 

AER = LS / (MB * LE) * 100

The values given above are inserted into the equation below and the solution is calculated:

AER = 100000 / (560 * 200) * 100 = 89.285 (%)

Example Problem #2

The variables required for this problem are provided below:

lump-sum premium ($) = 200,000

monthly benefit ($) = 700

life-expectancy period (months) = 200

Test your knowledge using the equation and check your answer with the calculator above.

AER = LS / (MB * LE) * 100 = (%)