A single premium immediate annuity is an annuity offered by insurance companies that requires one single lump sum payment in order to receive the benefit of regular payments for a certain amount of time. The purpose of a single premium immediate annuity is to generate an income stream that can last for many years.
Some single premium immediate annuities can last for a person's entire life until they die. Some only last for a certain amount of years. It is common for non-life long single premium immediate annuities to last anywhere from five to 30 years. There are also investing options for these annuities. For example, many insurers will allow the annuity to be tied to a mutual fund and payments can be based on the performance of the fund, if the investor so chooses.