Substandard Health Annuity Definition

A substandard health annuity is an insurance product that is purchased to cover an individual with a known health problem so severe that it is likely to shorten the annuitant’s life expectancy. As the annuitant’s life expectancy is shorter than a comparable healthy person’s life expectancy, substandard health annuities often pay higher amounts per payment period. Of course, a substandard health annuity may also have a higher purchase price. For example, an individual with cystic fibrosis might purchase a substandard health annuity.