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Enhanced / Impaired Annuity


Some Canadian life insurance companies offer impaired annuities for people with severe health problems which affect their life expectancy. Annuity payments are higher than a standard life annuity to compensate for a likely lower income period.


We’ll consider issuing an enhanced life annuity for an annuitant with a life-shortening illness or condition. This can result in lower premium or higher income than for someone of the same age and sex without a life-shortening condition . Only life annuities can be impaired annuities; term certain annuities don’t qualify .


Age rating for an impaired annuity

To calculate annuity income they use, as normal the annuitants age and sex. The annuity companies calculate an adjusted age where their life expectancy is the same as a person with no impairment.



As an example, a 60-year-old male client with a condition may have the same life expectancy as a 70 year old man. We calculate his annuity income based on the life expectancy of a 70 year old.


Underwriting an impaired annuity

Underwriters review medical evidence to determine someone qualifies for this impaired or enhanced annuity.


Heath impairments for most companies

Cerebral vascular accident (stroke) – with residual paralysis.

Myocardial infarction (heart attack) – with residual symptoms or angina or other complications .

Multiple Sclerosis ( ms ) – severe: Unable to work; dementia (marked by deteriorating cognitive functioning often with emotional apathy); requires 24/7 care; wheelchair dependent .


Quadriplegia – paralysis from the shoulders down with loss of bladder and bowel control .


Paraplegia – paralysis from approximately the waist down with loss of bladder and bowel control .


Cancer – advanced or aggressive cancer including metastases (spread outside the organ or place of origin) but life expectancy is greater than two years.


Parkinson’s disease (a degenerative disorder of the central nervous system) – severe: Unable to work; dementia; (marked by deteriorating cognitive functioning often with emotional apathy) requires 24/7 care; wheelchair dependent .


Diabetes (a condition where the body cannot use glucose, a type of sugar, normally) – severe with complications including kidney disease (kidneys operating at less than 50% of their functionality), kidney transplant, stroke, congestive heart failure, heart attack and amputation of a limb or limbs .


Aortic aneurysm – any swelling of the aorta or weakness in the aorta wall at that location .


Emphysema – severe with or without cardiac complications: Requires continuous oxygen use . Severely restricted activities – cannot exercise, walk any significant distances, climb stairs independently etc .


Cirrhosis of the liver – severe: Repeated hospitalizations with jaundice, encephalopathy, ascites (abnormal accumulation of fluid in the abdomen), liver failure, liver cancer .

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