How Medical Underwriting May Get You a Better Payout
While immediate annuities can provide a guaranteed level of income, the paychecks typically stop when you die. As a result, there’s no reason to buy one if you have a life-threatening health problem – unless you ask for medical underwriting.
An immediate annuity is a contract between an individual and an insurance company. The individual gives the insurance company a sum of money, and the insurance company gives the individual a stream of income for a specified period of time, often life.
Because most immediate annuities provide payments based on the purchaser’s average life expectancy, individuals who don’t expect to live long due to health problems may not benefit. For individuals who plan to live a long time with health problems, though, a few insurers offer a way to obtain a better payout – medical underwriting.
With medical underwriting, an individual with any one of a number of medical conditions can have his or her payout based on his or her expected life expectancy. This could result in higher annuity payouts than would ordinarily be available.
To qualify for medical underwriting, you must have a relatively serious condition. You must also submit your medical records to the insurance company. If the insurance company determines that you have a shorter-than-average life expectancy, it may bump up your payout. Your financial advisor can provide you with more information about medical underwriting and help you determine if you’re eligible.