What is a Single Premium Immediate Annuity (SPIA)?

A single premium immediate annuity — SPIA, or just "immediate annuity" — is a contract you purchase from an insurance company with a one-time lump sum, and in exchange the insurer guarantees you a stream of income that begins within 1 to 12 months and continues for the rest of your life (or both your life and your spouse's, if joint). It functions like a pension you buy for yourself: predictable, contractual, and not tied to market performance.

Once issued, your principal is fully converted into the income stream. You can no longer withdraw the lump sum, but in return you receive lifetime payments that the insurer is contractually obligated to make regardless of how long you live or what the markets do.

When Does an Immediate Annuity Make Sense?

SPIAs aren't right for everyone. They solve a specific problem: covering essential retirement expenses with guaranteed income that you cannot outlive. Here's a quick gut check.

Key Options to Consider

The base SPIA — life only, no riders — produces the highest income because the insurer's obligation ends when you (or your joint annuitant) pass. But most buyers add features to balance income with protection. Each one trades some monthly payout for added flexibility:

Cash Refund or Installment Refund

If you die before the cumulative payments equal the premium you paid in, the remaining balance goes to your beneficiaries. This protects your heirs from a "buy the annuity, get hit by a bus" scenario without significantly reducing your income.

Life with Period Certain

Guarantees payments for a fixed number of years — typically 5, 10, 15, or 20 — regardless of whether you're alive. If you outlive the certain period, payments continue for life. If you die during it, beneficiaries collect the remainder.

Joint and Survivor

Pays for as long as either spouse lives. Income typically continues at 50%, 75%, or 100% of the original payment after the first death. The higher the survivor percentage, the lower the starting income.

Inflation Adjustment (COLA)

The standard SPIA pays a fixed dollar amount, which means inflation steadily erodes purchasing power. A 1–5% annual increase rider, or a CPI-linked rider, addresses this — at the cost of a meaningfully lower starting income. Some buyers prefer to keep the higher fixed payment and offset inflation with a separate stock-and-bond portfolio.

The Trade-Off Between Carrier Rating and Payout

Higher-rated insurers (A++ from AM Best is the top mark) are typically more conservative with their reserve assumptions, which usually means slightly lower payouts. A carrier rated A or A- with otherwise sound fundamentals will often offer the highest income. We only show carriers rated A or better.

One strategy worth considering: rather than picking just one, split the premium across two carriers — for example, half to the highest-rated insurer for security, half to the highest-payout insurer for income. It's the same diversification logic you'd apply to any portfolio.

How the Buying Process Works

SPIA pricing changes regularly with interest rates, so quotes are valid for a limited window — generally 7 to 14 days — and a fully completed application must be received and accepted before the rate lock expires. Once you've decided to move forward, the path is straightforward:

• We pull live quotes from over 20 top-rated carriers based on your age, gender, state, premium amount, and income start date
• You review the options side-by-side and pick the carrier and rider package that fits
• We help you complete the application, and our team handles submission and case management with the carrier
• The contract is issued, the carrier confirms your first payment date, and your income stream begins

Most applications are submitted in under 10 minutes once you've decided on a quote. There's no medical exam — SPIAs are priced on age and gender, not health.

Ready to See Your Numbers?

The rates above are illustrative — your actual quote depends on your age, state, premium amount, and the riders you select. Run your own personalized quote in under two minutes, or call us directly and we'll walk through the options with you.