How does a Single Premium Immediate Annuity (SPIA) work?

The Annuity Man

Single Premium Immediate Annuities (SPIAs) have no annual fees, no moving parts, and are simplistic pension products that can provide part of your overall guaranteed income floor.  SPIAs can be customized to fit your specific situation and should be shopped with all carriers to find the highest contractual guarantee available.

Annuities are the only financial product that guarantees an income stream regardless of how long you live.  You are transferring the risk to the annuity company to pay, and there is no ROI (Return on Investment) until you die. 

Single Premium Immediate Annuities (SPIAs) are very simple pension products that were first introduced in the Roman Times to provide a lifetime income stream to the dutiful Roman soldiers and their families. SPIA payments are primarily based on life expectancy at the time you start the income, with interest rates playing a secondary role.  In addition, the payments are a combination of return of principal plus interest.  Even if you outlive your projected life expectancy and your account is drawn down to zero, the annuity company is on the hook to pay.  That is the unique benefit proposition that only annuities can provide.

SPIAs can be structured single life, joint life, period certain, or a combination of those.  SPIA quotes can be customized to fit your specific situation and goals and should be shopped with all carriers to find the highest contractual guarantee available.  The claims paying ability of the carrier and their ratings should be considered

You can contact Stan if you have any questions or want to see quotes on your specific situation.

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