P903 Determining if an Agreement is Actuarially Sound

Program	Manual Section
ALTCS	MA903H

To determine whether the payments to or on behalf of the person are actuarially sound, complete the following calculation:

Step	Action
1	Verify the equity value of the transferred asset.
2	Find the age of the customer at the time of the transfer in the “Exact Age” column on the left of the Period Life Table (from socialsecurity.gov)
3	Follow the row for that age across to find the life expectancy in years for the annuitant’s gender.
4	Calculate the yearly amount that will be paid to the spouse, disabled child or disabled person by the transfer document or trust.
5	Multiply the life expectancy from Step 3 by the yearly amount from Step 4
6	Subtract the result of Step 5 from the verified fair market value of the asset(s) from Step 1. If the result is zero or less, there is no uncompensated value. If the result is greater than zero, the remainder is the uncompensated amount.