Annuity and life insurance pricing rests on two opposing forces: mortality credits (the pooled premiums of those who die early, which subsidize survivors) and expense/commission loads (fees that erode returns). A mortality credit is the implicit return a survivor earns from the pool. For a 65-year-old cohort, roughly 1.5–2.5% of the pool dies each year, generating a mortality credit of similar magnitude.

The net benefit of an annuity depends on whether the mortality credit exceeds the product's load. A no-load immediate annuity might return 7% to survivors; a loaded variable annuity with a 2.5% M&E charge and 5% commission may net only 3–4%.

Mortality credit rises with age — at 85, it can exceed 10% annually.
Adverse selection means annuity buyers live longer than average, raising the true cost.
Loads (commissions, M&E, rider fees) are the main reason annuities underperform.

Age	Annual mortality credit	Typical load
65	~2.0%	1.0–2.5%
75	~4.5%	1.0–2.5%
85	~11.0%	1.0–2.5%