Mortality credits
Certified Financial Planner glossary · Certified Financial Planner
Definition
The excess return an annuitant receives from the pooled contributions of those who die earlier, unavailable in any non-pooled instrument.
Mortality credits in plain English
A healthy 70-year-old compares a SPIA to a bond ladder and wonders where the extra annuity cash comes from. Mortality credits are the excess return an annuitant receives from the pooled contributions of those who die earlier, a feature unavailable in any non-pooled instrument. You cannot recreate that cross-subsidy with DIY bonds alone. Longevity pooling is the economic engine, and mortality credits are the unique return source that separates annuities from self-managed bond ladders.
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