Impaired Life Annuity

What Does Impaired Life Annuity Mean?

An impaired life annuity is a retirement program designed for individuals with serious health conditions, such as heart disease, diabetes, or certain cancers. The payments from this type of annuity are higher than those from a regular annuity because the annuity is not expected to be paid out for as many years.

Many people who qualify for an impaired annuity have also looked into life insurance for chronic illness, since both products are priced around the same underwriting concerns.

Insuranceopedia Explains Impaired Life Annuity

Because an impaired life annuity is designed for individuals with major health problems, insurance companies offering these annuities tend to provide higher periodic payments. This is not only due to the financial needs for health maintenance but also because of the shorter life expectancy of those purchasing this type of annuity. Impaired life annuities are generally available to people with a life expectancy of less than five years. Applicants must disclose their health details when applying for this type of annuity.

The disclosure process is similar to what insurers ask for when someone applies for life insurance for heart patients or coverage for people with diabetes, since the insurer needs medical records to estimate how long payments will likely be made.