Fixed Insurance Product
Single Premium Immediate Annuity (SPIA)
A single-premium contract that converts a lump sum into a stream of guaranteed payments under a selected payout option.
Overview
A SPIA is purchased with a single premium and begins paying income to the annuitant under the payout option selected at issue. Payout options commonly include single life, joint and survivor life, period certain, and life with period certain. All income guarantees are subject to the claims-paying ability of the issuing insurance carrier. Once income begins under the selected option, the contract generally cannot be surrendered, and the payout option cannot be changed.
How it works
- 1Pay a single premium to the issuing insurance carrier
- 2Select a payout option at issue (life only, joint life, period certain, or a combination)
- 3Income payments typically begin within approximately 30 days of contract issue
- 4Payments continue in accordance with the elected option for as long as the contract requires
Best for
- Retirees seeking a contractual stream of income to supplement Social Security and other pension income
- Bridging an income gap between retirement and the start of Social Security or a deferred pension
- Converting a portion of retirement assets into income that cannot be outlived under a life-contingent payout
Considerations
- Once income begins, the contract is generally non-surrenderable and the payout option cannot be changed
- Cost-of-living or inflation-adjustment options are available from some carriers and result in a lower initial payment
- Under a life-only option, payments cease at the death of the annuitant; period-certain or joint-life options can mitigate this
- Taxation of payments depends on the source of funds (qualified vs. non-qualified) and the exclusion ratio for non-qualified funds
Fees & charges
- No ongoing annual contract fee on a base SPIA
- Optional features (inflation adjustments, cash-refund or installment-refund guarantees) reduce the initial monthly payment in exchange for the additional benefit
Lifetime Paycheck
A check, every month, for life
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Year 1… and every year afterForever
Want a personalized illustration?
A licensed Pebyl Financial agent runs the carrier numbers based on your age, premium, and state. Educational, not a sales pitch.
Important disclosure
Product features, rates, caps, spreads, participation rates, and rider costs are set by the issuing carrier, vary by state, and are subject to change. This page is educational and does not constitute an offer to sell or solicitation to purchase. Guarantees, where referenced, are subject to the claims-paying ability of the issuing insurance carrier.