What is a Rated Age and How Does a Rate Age affect Structured Settlement Cost?

A rated age is an opinion or "impaired risk rating" of an underwriter at the structured settlement annuity issuing life insurance company, which, after a review of medical information, estimates that the plaintiff (measuring life) may not live a normal lifetime and is willing to accept the risk of providing lifetime payments at a lower annuity premium cost than otherwise would be required for the plaintiff's actual age. The structured settlement annuity is quoted as if the rated age is the plaintiff's age instead. 

1. Rated Age = Lower cost of annuity payable for life;
2. Rated Age = Lower cost for temporary life annuity;
3. Rated Age = Lower cost for life contingent lump sums.

Transfer of Mortality Risk to a Life Insurance Company

The use of a structured settlement enables the transfer of mortality risk to a life insurance company. 

The annuity issuing life insurance company assumes the risk that the annuitant lives longer than expected. The exposure to risk is the opposite of the risk to which the same life insurance company would be exposed if underwriting life insurance on the plaintiff, namely that the plaintiff (insured) dies sooner than expected. 

With a rated age you use adverse medical information to YOUR advantage for the pricing of structured settlement annuity payment streams wth lifetime payments. 

The risk that the life insurance company absorbs is a huge benefit to a plaintiff with lifetime medical needs and/or a need for lifetime income, who needs certainty. Using a structured annuity with a deferred start date as an "annuity back stop" is often a prudent strategy to conserve assets when there is a wide range between high and low mortality assessments. The life insurance company issuing the structured settlement annuity (also known as an "enhanced annuity", "rated age annuity" or "enhanced "SPIA") has the "law of large numbers" working for it can spread its risk over hundreds of thousands, something that the individual plaintiff does not. Rate ages can reduce the cost of funding a life care plan or reduce the amount needed to fund a Medicare Set Aside arrangement.

• Two New York admitted structured settlement annuity issuers will medically underwrite personal injury attorneys for structured settlement rated ages, which may be helpful if the attorney is structuring his or her attorney fees. Outside of New York there are also two carriers who will medically underwrite attorneys for structured attorney fees.
  
• Note that Rated Ages have expiration dates which are usually 6-12 months , varying by the structured settlement annuity issuing life insurer, after which the rated ages need to be renewed. In cases where the medicals are stale, or too far aged, re-underwriting with current medical information may be necessary.

Do Rated Ages Impact New York Structured Judgments Under NY CPLR Articles 50A and 50B?

A rated age could also reduce the cost of a New York structured judgment for a Defendant or its Insurer. Certain aspects of a CPLR 50A or CPLR 50B structured judgment are life contingent, such as the adjusted awards for future medical expenses and future pain & suffering. A rated age would most likely impact future medicals, which stretch many years into the future, Under New York law, future pain & suffering is compressed into 8 years for medical, dental and podiatric malpractice cases under Article 50-A and 10 years for general liability cases under Article 50-B structured judgments, so it would need an exceptionally high rated age and a large amount of damages to have significant impact on the future pain and suffering component of damages.

How Do You Get a Rated Age?

The following conditions are examples of some that might result in a rated age or impaired risk rating: head injuries causing brain damage and/or paralysis, cancer, heart conditions, spinal cord injuries, serious internal organ damage, high blood pressure, diabetes and other conditions and/or illnesses affecting activities of daily living. Please note that the condition giving rise to the rated age need not have any relation to the injury on which the claim, dispute or lawsuit is based .   Where these or conditions are present, please send medical records to our office and we will ask the underwriters at our life insurance company resources to provide us with a "rated age" evaluation. The most current relevant medicals will usually generate the best result. 

The rated age may vary widely among life insurance companies .  We actively shop through our extensive resources to achieve the best price/benefit package for your structured settlement.

We also suggest that attorneys refrain from pre-underwriting rated ages themselves . From time to time we encounter cases where the attorney dismisses the possibility of a rated age and yet we end up obtaining one. As the cost savings or yield boost from the rated age may be significant, why leave yourself exposed by not getting the best for your client?

Rated ages, impaired risk or medically underwritten income annuities may be available in a wide variety of other applications as well.  For example an immediate annuity with a rated age could partially offset increased costs for life insurance, or boost retirement income to the annuitant.

We will need the history of illness, including date of diagnosis, any changes in condition, other significant health conditions and pertinent past histories. Please try to keep it under 20 pages.

Acceptable forms of medical information for rated ages:

• Hospital discharge summaries for last 5 years.  
• Medical report from time of diagnosis. 
• Most recent medical report. 
• Attending physicians statement (APS).
• Life care plans are helpful, but not on a standalone basis. Some companies will not issue rated ages without a report signed by a treating physician.
  

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Last updated March 6, 2025