An immediate annuity, or SPIA, is an insurance product where a consumer exchanges a lump sum for a guaranteed stream of income, typically used for retirees on fixed incomes. It offers various payout options such as lifetime payments, joint and survivor payments, and period certain annuities, each with different structures for beneficiaries. Consideration should be given to financial flexibility and control over assets before purchasing an immediate annuity.

1. What is an immediate
annuity?
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2. An immediate annuity or SPIA is an
insurance product in which a consumer
exchanges a lump sum of money for an
immediate irrevocable but guaranteed
stream of income.
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3. The state lottery typically
uses a SPIA as the payout
option when collecting
winnings.
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4. A single-premium immediate annuity in
most instances is irrevocable which means
there’s no turning back after you start the
policy so be careful when making that
decision.
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5. The term “annuitization”
or “annuitize” is used to
describe this irrevocable
income stream.
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6. With SPIA’s you can either start receiving
your annuity checks within 30 days or
defer up to a year.
You can purchase a Deferred Income
Annuity or a QLAC if you want to defer
longer than a year.
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7. Who should consider an
Immediate Annuity?
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8. Immediate annuities are not a good
retirement plan for a lot of people for
several reasons but can be helpful to a
specific type of person, primarily retirees
living on a fixed income.
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9. If you’re planning to live on a fixed income
in retirement, a SPIA might be a good
option to “layer” another stream of steady
income in addition to social security.
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10. Only purchase an immediate fixed annuity
if you have plenty of liquid assets to
withdraw from in the case of emergencies.
Remember, you’re going to be stuck with
the annuity provider.
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11. If you're not ok giving up
control of your assets,
consider a deferred annuity
with an income rider.
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12. Annuity Payout Options
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13. The Annuity Expert
Period Certain
Annuity payments are distributed to you for a fixed period of time. In most
cases you can choose a period ranging from 5 years to 30 years.
If you die prior to the end of the fixed period, the payments continue to
pay your designated beneficiary until the period is up.
Because annuitization rates are low, you’re basically paying yourself back
over time with a little bit of interest which is currently around 1.25%.

14. The Annuity Expert
Single Lifetime Income
Annuity payments are distributed to you for the rest of your life until the
day you die, guaranteed.
Typically there is no death benefit to heirs.
The life only payout usually distributes the highest income out of all
annuitizations.

15. The Annuity Expert
Joint and Survivor
Payments are made to you for the rest of your life until the day you die,
guaranteed.
When you die, the surviving spouse will continue to receive annuity
payments for the rest of their life as well.
One can choose if there is a reduction in payments (50% to 100%) for the
surviving spouse in exchange for a higher annuity payment upfront.
Once the surviving spouse dies, there is no death benefit typically.

16. The Annuity Expert
Lifetime Income with a Guaranteed Period
Your annuity payments are paid to you until the day you pass away, with a
guaranteed period of time that acts as a backup plan in case of premature death.
If one the annuitant (you) die before the guaranteed period of time expires,
payments continue to pay your designated beneficiary until the period has expired.
Consider this as a hybrid payout of the Single Life Only and the Fixed Period of
Time.This payout option can also be applied to a Joint and Survivor payout as well.

17. The Annuity Expert
Lifetime Income with Cash Refund
The annuitant will receive payments for the rest of their life until the day
they die.
If the annuitant (you) dies prior to receiving your original investment
amount, the difference is paid to the designated beneficiary in a lump
sum.

18. The Annuity Expert
Lifetime with Installment Refund
Similar to the Lifetime with Cash Refund, annuity payments will be
distributed for the rest of the annuitant’s life.
If the annuitant dies prior to receiving the original investment amount
back, the difference is paid to the designated beneficiary over installments
until the original investment is paid back.

19. The Annuity Expert
Lifetime with Installment Refund
Similar to the Lifetime with Cash Refund, annuity payments will be
distributed for the rest of the annuitant’s life.
If the annuitant dies prior to receiving the original investment amount
back, the difference is paid to the designated beneficiary over installments
until the original investment is paid back.

20. The Annuity Expert
Cost of Living Adjustments
Most annuitizations allow you to elect an optional Cost of Living
Adjustment (COLA) to your annuity payments.
The payments will start lower than most payments but will increase each
year mimicking inflation.
In most cases, you get to choose how much of an increase you receive
each year.

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FINDING THE PERFECT INSURANCE