When purchasing an annuity, whether fixed or variable, immediate or deferred, there are no health questions that are asked to determine eligibility.
Annuities are a contract that is purchased from an insurance company. Annuity contracts work almost exactly the opposite of life insurance contracts once the annuitant (the person being covered in the contract, usually the owner) starts taking an income.
In exchange for a lump sum of money the insurance company agrees to pay out a set amount for as long as the annuitant lives. In this respect, the insurance company does not have an interest in verifying health prior to issuing an annuity.
Along with annuities many annuity companies offer a product strictly through banks that are designed to maximize inheritance payouts. These products are really single-premium life insurance products. As insurance products this particular product does ask health questions, although this product is not often fully underwritten.
This particular product is typically sold up to age 85, in a maximum amount of $1500 times the policy holder’s age. The moment that the product is sold the owner’s beneficiary is guaranteed a stepped-up death benefit, tax free.
Additionally the money that is used to purchase this insurance is completely liquid and will earn interest. If the policy owner needs that money back the insurance company will give all of the money back, at minimum.
The funds will earn interest, but closing the policy and taking all of the money back within the first seven years will result in a penalty. This penalty will never be larger than the interest that you have earned, so the principle amount is always guaranteed.
These inheritance building products provide two excellent benefits then, maximizing the death benefit and eliminating taxes for the beneficiary, all without risking the principle. This product is only available through banks, and the banker must be licensed with the state to sell this insurance product.
While annuities never require health questions insurance companies ha similar products that do require health questions. If there is a reason for desiring to avoid answering health questions then an annuity is appropriate and may be ideal. Otherwise inheritance building products offer many benefits.