What Is a Single Premium Immediate Annuity or SPIA?

A single premium immediate annuity is a contract with an insurance company. There is one lump sum deposit and usually within 12 months, hence the word immediate. In that word, they're going to start a payment. It could be within 30 days. It could be on the 12th month. The payment will be locked in stone, and there's a lot of different ways in which you can take the payment. There's things like life only where it just pays for life. There are periods, certainly there's cash refund, installment refund. So there's a lot of variations of that single premium immediate annuity. A great consultant's going to be able to share with you a little bit more. Number one, is that the right solution? And number two, which of those variations would make the best sense? The benefit of a single premium immediate annuity, particularly when we are using non-qualified funds, is something we would refer to as an exclusion ratio. And with the exclusion ratio, what happens is as I'm receiving the payment, part of that payment is going to be the original premium and part of it is going to be interest. So as I received the payment, only a portion of that income payment is taxable. And who doesn't like paying less in taxes?