Ambient Assisted Living has become a cost-effective option for coping with the rapid aging of society. Personalized health monitoring is an important aspect of Ambient Assisted Living, and it depends on the availability and use of appropriate medical devices. Medical virtual instruments provide a viable option for such devices. They refer to a hardware/software co-design of medical instruments that provides the dependability of hardware as well as the flexibility of software. In this paper, we discuss the concept of medical virtual instruments and their use as an effective option for Ambient Assisted Living. The discussion covers the enablers of this technology, the main challenges, and the hardware, software and connectivity options for such instruments.