Single Premium Immediate Annuities (SPIAs) are purchased with a single deposit amount paid to the provider. As the name implies, the single premium immediate annuity starts giving regular monthly, quarterly or annual returns to you soon after payment to the insurance company. This would mean 30 days from the date of deposit; but within certain limits you can also defer the date for payments to begin in the single premium immediate annuity.
Single Premium Immediate Annuity provides a lifelong payment and the safety of not outliving your savings. The other prominent feature of single premium immediate annuities is that it is not affected by market fluctuations and thus a steady income is guaranteed.
A typical single premium immediate annuity consists of two phases; the Accumulation phase and the Payout phase. The first phase in the single premium immediate annuity allows you to make investments with the insurance provider. The second phase of the single premium immediate annuity is when you actually start receiving returns on your investment. Till such time that you receive returns you can defer the tax component charged on the investment. The payout phase will begin once you inform the provider of your desire to receive returns. That being said if you have subscribed for a fixed or variable annuity, you can have your annuity changed into the single premium immediate annuity.
A Single premium immediate annuity is advantageous if bought after tax funds. The payments that you receive are only partially taxable. Thus in the long run the principal will be returned to you.
A single premium immediate annuity has a variety of options that you can choose from to suit your requirements. Period certain only single premium immediate annuity, life only single premium immediate annuity, life and period certain single premium immediate annuity, joint and survivor single premium immediate annuity.
In the Period certain single premium immediate annuity the subscriber chooses the number of years he wishes to receive the money, after which it stops. In the life only single premium immediate annuity he continues to receive money as long as he lives. The life and period certain single premium immediate annuity assures lifelong money but only till a given number of years after which it ceases. The joint and survivor single premium immediate annuity guarantees payment for the subscriber’s lifetime and the life of the person chosen by him. On death of the subscriber the payment continues for the life of the survivor.
