Poor Health Can Be a Factor in Producing More Retirement Income

There’s a type of annuity that pays you more if your health profile is not good.  This may sound strange, but here’s how it works: SPIA, which stands for Single Premium Immediate Annuity (also referred to as health adjusted immediate annuity), has long been a popular investment for obtaining a fixed income which cannot be outlived (income for life).  With the income for life option, the issuing insurance company calculates the size of your monthly payment based on standard life expectancy tables, based on an analysis of your health.  Once calculated at the beginning, you continue to receive the same monthly amount, regardless of how long you live.  It’s almost like getting a second social security check. companies take into account your individual health condition and use that information to calculate your life expectancy.  If your health records indicate conditions that could lower your life expectancy, this is factored into the monthly payment you receive and increases the monthly payment.  You then receive this fixed monthly amount no matter how long you live.| Take this hypothetical example.  A man age 70 decides to obtain a SPIA.  He deposits a $100,000 premium and based on his standard life expectancy of 16 years, his [...]

Read more...