>: 



ANN! II V 



ANN 



before, and let Ut Carlisle Table be chosen, interest being at 4 per 

 cent, we have then : 



TABLK V.- Annuity .it age 55 

 25 



Sum 



TABU VI. Joint annuity, 55 and 25 

 nee . . 



11-3 

 178 



103 



. 186 



The value, therefore, of an annuity of I/. |wr annum on the survivor 

 in 18 l. 



The value of an annuity which u not to be payable till either one or 

 other of two person* is dead, and which it to continue during tin- life 

 of the survivor, is found as in the last case, only xubtntcting ' 

 value of the joint annuity, instead of tliat value itself. In tin- pre- 

 ceding cane it u S'Sl. For thin case only differs from the preceding in 

 that the annuity in not payable while lioth are alive, that is. durini; i !-. 

 joint live*. Consequently the value in thu case U leas than that in the 

 last, by the value of an annuity on the joint lives. 



The value of an annuity to be paid to A. from and after the death of 

 B., if the latter should hapj>en to die first, in the value of an annuity on 

 the life of A. diminished by the value of an annuity on the joint lives 

 of A. and B. For the situation is exactly the some as if the office 

 granted an annuity to A., to be returned an long as both should live 

 The age* and Table being as before, and the life on whose survivorship 

 the annuity depends being that aged 25, we have : 



TABLE V. Annuity at age 25 . . . 17'' 

 TABLE VI. Joint annuity, 25 and 55 . . 10-3 



Difference 



7-3 



whence the value of the required annuity of I/, is 7'Si. 



The following Table, extracted with abridgment from Morgan on 

 Insurances, deduced from the Northampton Table, with interest at 4 

 per cent, given the average sum to which the savings of nn individual 

 may be expected to amount at the end of his life, improved at com- 

 pound interest from the time when he begins to lay by : 



TABLE VII. I'IOIAM.I AMOUXT or 17. LAID BY YEARLY, AND ixrnovr.ii 



TO THE EXD OF I.I1 I . 



Th.it is to say, according to the Northampton Tables, if a person were, 

 at the age of 26, (that is, a year after 25,) to begin laying by 1 mi/. 

 a-year at interest, he might expect the amount at the end of his life to 

 be 7D-2/. for each pound laid by yearly; or 7920Y. Or to speak more 

 strictly, if 100 persons were to do this, they might expect that the 

 average amount of their savings, reckoning the accumulations at their 

 deaths, would be 7920/. each. As we have already observed, the mor- 

 tality of the Northampton Table is greater than the fact, and the 

 average accumulations would be greater, from young ages considerably 

 greater, than those shown in the preceding table. 



We have seen that the security of the method for estimating the 

 value of life annuities, depends upon the presumption that the average 

 mortality of the buyers is known. This average cannot be expected 

 to hold good, miles* a large number of lives be taken. Therefore, the 

 granting of a single annuity, or of a few annuities, as a commercial 

 speculation, would deserve no other name than gambling, even though 

 the price demanded should be as high as that given in any tables 

 whatsoever. 



In the preceding tables, we would again remark, that our object has 

 been simply to furnish the means of giving a moderately near deter- 

 mination of a few of the most simple cases. We should strongly 

 recommend every one not to venture on important transactions, 

 without professional or other advice on which he can depend, unless 

 he himself fully understand the principles on which tables are con- 

 structed. The liability to error, even in using the most simple table, is 

 very great, without considerable knowledge of the subject : and most 

 cases which arise in practice contain some circumstances peculiar to 

 themselves, which have not and could not have been provided for in 

 thegcneral rules. 



The following references to works on thin subject may be found 

 useful. See alxo MOKTAI m : lU.vuisioxs. 



AjsniTiEa CERTAIN. 1. .Smart'* ' Tables of Interest,' Ac. London, 

 1720. There U an edition published in 1780, which is said to be very' 

 incorrect The values for the intermediate half years given in this 

 work are not correctly the values of the annuities on the sup|x<itioii 

 of half yearly payuienU; in other respects it is to be depended upon. 

 . Corbaux, ' Doctrine of Compound Interest,' Ac, London, 1825. 3. 

 Bsily, ' Doctrine of Interest and Annuities.' London, 1808. Smart's 

 T.ililc* arc republished in this work from the correct edition. Work- 

 on lifr-iiimitilir* generally contain principles and tables for the calcula- 

 tion of nnnuities ceit-iin. 



Lira AssrrriEg. 1. Price, 'Observations on Reversionary Pay- 



menu,' Ao. Kdited by W. Morgan -12. (Seventh Edition" i 



. Baily, on Life Annuities and Assurances.' London, 1810. 8. 



Milne, on the ' Valuation of Annuities and Assurances,' Ac, London, 



4. Morgan, mi the ' Principles of Assurance, Annuities, Ac., 



London, 1821. 5. Daviee' ' Table* of Life Contingencies.' London, 



1825. 6. Finlaison, on the ' Evidence and KlcmcnUry Facts on whieh 



Tables of,Life Annuities are Founded. IViut,-.! l.y the ll.uiso of 



Commons, 31st March, 18J'.'.' 7. (;oiii|x'rt/., Kstimntion of the value 



of Life Contingencies.' in ' Philosophical Transaction^; 1.--JO. 



ANNI'ITY (in Law) consist* in the juiyment of a certain num. 

 annually calculated, and charged upon the person or jierwuial <- 

 theindivi.lti.il tY.,m whom it i* due ; if charged ujion real estat. 

 not an annuity, but a rent-charge. [RENT.] A sum jviyable occasionally 

 does not constitute an annuity; the time of payment must re.-n- 

 larly, but it is not necessary that the time* of paymsol should ! 

 interval of a year ; an annuity may be payable quarterly, or hall \ 

 or at any other aliquot |xn-tii,n of a year; it may U- made payable once 

 in two, three, twenty, or any other number of years. 



Under the Roman law, annuities were chiefly created by will. 

 tilting a charge upon the heir in favour of the legatee. fDii;..' lib. 

 xxxiii. tit. 1.) In the middle ages they were frequently given < 

 fessional men as a species of retainer ; and in modern time* ha\ 

 much resorted to as a means of borrowing money. When tin- , 

 who borrows undertakes, instead of interest, to pay an annuity, he i- 

 styled theyrawfwr ; the person who lends. U-ing entitled to receive the 

 |.armentR, is called tin- ,,r,i,itr, of the annuity. This j.racti. 

 introduced on the Continent with the revival of commerce, when the 

 advantages of Inn-rowing were already felt, but the taking of < 

 was strictly forbidden. In the 15th century contracts of this kind 

 were decided by the popes to be lawful, and were recognised as such in 

 France, even though every species of interest upon money borrowed 

 was deemed usurious. (Denial's 'Civil Law, 1 ]rt i. b. i. t, ti.) The 

 commercial states of Italy early availed themselves of this mode of 

 raising money, and their example has since been followed in the or 

 of the national debts of other countries. [NATIONAL DEBT ; ST< K 



An annuity may be granted for a term of years, for the life or li\ - 

 of any persons named, or in perjietuity ; and in the latter case (though 

 as in all others, the annuity as to its security is personal only) it may 

 be granted to descend in the some manner as real prop, -rty : .ui'l 

 such an annuity is reckoned among incorporeal hereditam. 



A. perpetual annuity, granted in consideration of a Hum advanced, 

 differs from interest in this, that the grantee has no right to demand 

 back the pi inci|>al sum ; he must be content to receive the annuity 

 which he has purchased. But the annuity is in its nature redeemable 

 by the grantor, who may discharge himself from any further pa;, 

 by returning the money borrowed. It may however lie agreed between 

 the parties (as it generally has 1 ict-n in the creation of our own national 

 debt, which consist* chiefly of annuities of this sort) that the redcmpti. MI 

 shall not take place for a certain numlier of year-. 



An annuity for life or years is not redeemable in the same m.innei ; 

 but it may be agreed by the parties that it shall be redeemable mi 

 certain terms; or it may afterwards be redeemed by consent of Ix.th 

 Irties. Where the justice of the case requires it (as where there has 

 been fraud, for instance, or the bargain is unreasonable), a court of 

 equity will decree a redemption. When such an annuity is granted in 

 consideration of money advanced, the annual payments may be con- 

 sidered as composed of two portions ; one being in the nature of in 

 the other as a i>eriodical return of a port of the principal, so calculated, 

 that when the annuity shall have determined, the whole of the pi hi' ip.i 1 

 will have been rejnid. Annuities for life or years, being the only 

 security that can be given by persons who have a limited interest in 

 property, are frequently granted in consideration of a loan. Bcsidc- 

 this advantage, annuities for life, inasmuch as they are attended with 

 risk, were not within the reach of the usury law: . and were therefore, 

 w hili' these laws were in force, constantly used in order to evade them. 

 The legislature was then driven to require that certain formalities 

 should be observed in creating annuities. By statute 58 Oeo. III. c. 1 1 1 . 

 s. 1, every instrument by which an annuity is granted was made null 

 and void, unless within thirty days after execution thereof a memorial 

 was enrolled in Chancery. If any port of the consideration mom 

 returned, or paid in notes which were afterwards cancelled, or ret.iim-d 

 on pretence of answering future payments; or if the consideration Iwing 

 expressed to be paid in money, was ]nid in goods, the person charged 

 with the annuity (that is, the borrower) might, if any action were 

 brought against him, by applying to the court have the instrument 

 cancelled (s. ID. The statute also enacted that every contract for the 

 purchase of an annuity made with a minor .-honld be utterly void, and 

 should remain s... even though the minor, on coming of age, should 

 attempt to confirm it (s. 8). The provisions of this a. -I were intended 

 to be confined to cases when the annuity was granted in consideration 

 of a loan. It was amended and explained by the 3 Oeo. IV. 0. !'J. and 

 7 Oeo. IV. c. 75; but all the usury acU, of which this might be 

 t'Tin.d one, have been repealed (17 A 18 Viet. e. '.'">. and partie, are 

 now left perfectly free to make their bargains in the terms they 

 think lit. 



Annuities may be, and frequently are, created by will : 

 la-quest 'id, in cane of a deficiency in 



