Single Premium Immediate Annuity
What Does Single Premium Immediate Annuity Mean?
A Single Premium Immediate Annuity (SPIA) is an annuity offered by insurance companies that requires a one-time lump-sum payment. In return, the annuitant receives regular payments starting almost immediately, typically within a year of purchase. The primary purpose of an SPIA is to generate a steady income stream that can last for many years, providing financial stability.
Insuranceopedia Explains Single Premium Immediate Annuity
Single Premium Immediate Annuities (SPIAs) can vary in duration. Some provide payments for the annuitant’s entire lifetime, while others are set for a fixed term, typically ranging from 5 to 30 years. Additionally, many SPIAs offer investment options. For example, insurers may allow the annuity to be tied to a mutual fund, with payments fluctuating based on the fund’s performance if the investor opts for this arrangement. This flexibility makes SPIAs suitable for diverse financial goals and risk preferences.
