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SPIA: Single Premium Immediate Annuity
With a SPIA, a client gives a lump sum to an insurance carrier in exchange for guaranteed income that usually begins within 12 months.
SPIAs still exist and can be useful, especially when the client simply wants the most income now and does not need flexibility. The trade-off is exactly that: a SPIA is generally less flexible than some other solutions, and access to the lump sum is typically given up in exchange for the income stream.
More flexibility
FIAs with income riders
A fixed indexed annuity with an income rider can provide guaranteed lifetime income while letting the client retain more flexibility than a SPIA, depending on the contract.
- Account value vs. income benefit base: the account value is the real, accessible money; the income benefit base is a separate value generally used only to calculate income.
- Roll-up rates: the benefit base may grow at a stated rate during the deferral period, which can increase future income — but is not usually a withdrawable cash value.
- Payout factors: the percentage applied to the benefit base to determine income, typically rising with the client's age at income start.
- Single life vs. joint life: joint payouts cover two lives and usually produce a lower payout factor than single life.
- Income rider fees may apply, depending on the product, and are typically charged against the account value.
The income benefit base is generally used to calculate income and is not usually a cash value. Clients sometimes confuse it for a withdrawable balance — clearing that up early prevents disappointment later.
How it flows
From premium to lifetime income.
Side by side
SPIA vs. FIA with Income Rider
| Feature | SPIA | FIA with Income Rider |
|---|---|---|
| Income start | Usually within 12 months | Often deferred, then turned on later |
| Flexibility | Limited once income begins | More flexible, depending on contract |
| Liquidity | Lump sum generally given up | Account value may remain accessible, subject to terms |
| Market exposure | None; fixed income stream | Index-linked growth potential with a 0% floor |
| Lifetime income | Yes, can be life-contingent | Yes, via the income rider |
| Death benefit potential | Depends on payout option elected | Remaining account value may pass to beneficiaries, per contract |
| Best use case | Maximum income now, simplicity | Future income with growth potential and flexibility |
Comparing income strategies for a client?
We will help you run single vs. joint and SPIA vs. rider side by side.