What is a SPIA, single premium immediate annuity?

I have been trying to learn about annuities and how they can fit into a retirement plan. Does anyone know what a SPIA, single premium immediate annuity is and how it works?

Answer #1

Hi,

Single Premium Immediate Annuity (SPIA) works simply. When you pay the insurer a lump sum premium, the insurer guarantees to make regular payments to you, typically starting immediately. Each payment is fixed and stable for the time period selected. (Payment of lifetime income is contingent upon the claims paying ability of the issuing company or companies.)

It seems like a defined contribution plan.

Hope that helps.

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