A life SPIA transfers the risk to the annuity carrier to pay a lifetime income

stream regardless of how long you live. Most period certain structures are combined
with a life contingency so that you will receive a lifetime payment, or the
specific period, whichever is longer. For example, if you have a Life with 20 Year
Period Certain SPIA, that annuity will pay you for as long as you live. However, if
you pass away early in the contract, the listed beneficiaries on the contract will
receive payments for the remaining years on the period certain. In this example of
Life with 20 Year Period Certain, if the annuitant (person who receives the
payment) dies 8 years into the contract, the beneficiaries of the annuity will
receive payments for 12 more years.

The most efficient way to structure a SPIA is �Life with Installment Refund� or
�Life with Cash Refund.� Both provide the highest contractual payouts with the
guarantee that 100% of the initial premium will go the annuitant or the listed
beneficiaries. The insurance company does not keep a dime.

With that being said, the highest payout you can receive with a SPIA is by
structuring the policy �Life Only.� However, in this case, the insurance company
would keep the money if you passed away early, so I typically don�t recommend this
set up unless specifically requested. (click here to read how SPIAs can provide
income now)

The Good

When you are looking for income now or immediate income type solutions, Single
Premium Immediate Annuities (SPIAs) traditionally provide the highest contractual
payouts when compared to other annuity types. Also, you can attach a Cost Of Living
Adjustment (COLA) rider to the SPIA policy to contractually increase the annual
income stream by a declared percentage of your choice at the time of application.
(click here to read more about COLA riders)

The Bad

Single Premium Immediate Annuities provides no full liquidity once the contract is
in force and past the free look period. The analogy I like to use is like ripping
the knob off of a faucet. Once you do that the water is going to flow. The same
analogy can be used with a Single Premium Immediate Annuity. Once the income stream
is turned on, you cannot get to the lump sum, and can only get to your money in
payment form.