A Single Premium Immediate Annuity (sometimes referred to as an “SPIA”) may be the right annuity for you if you are looking for payments that begin right away and continue for the rest of your life or for a specified period of time. The annuity is purchased from an insurance company with a single, lump sum amount called a premium.
You can fund your immediate annuity in a number of ways:
Cash from a maturing Certificate of Deposit (CD)
Exchanging funds accumulated in a Multi-Year Deferred Annuity account
Proceeds from the sale of stocks, bonds, a home or a business
HOW DOES AN IMMEDIATE ANNUITY WORK?
In return for your lump sum, the insurance company promises to make regular payments to you (or to a payee you specify) for the chosen length of time – most commonly for the remainder of your life, however long that may be.
In most instances, immediate annuity payments are sent to you starting one month after you buy your annuity. When choosing an immediate annuity, you can choose how frequently you receive payments – often referred to as the “mode”. While annuity buyers typically choose to receive payments monthly, you may choose quarterly or even yearly instead.
In today’s immediate annuity marketplace, there are a number of ways the annuity can be customized to suit your specific life situation and concerns. In exchange for the guarantee of payments, you give up the right to demand the return of your original premium. Unlike some forms of life insurance or other types of annuities, you are generally unable to revise or cash in the immediate annuity once the “free look” period has passed.