Single Premium Immediate Annuities. An immediate annuity is simple and consumer-friendly. Immediate annuities guarantee an income stream within a month of purchase without an accumulation period. Immediate annuity rates depend on your upfront payment amount, contract terms, age and gender.

What happens if you break an annuity?

Canceling your annuity generally comes at a cost The same holds true for an annuity — break that contract, and you could face hefty surrender charges, which are based on the amount you ultimately withdraw.

Can you cash out a single life annuity?

In either case, a single-life annuity contract matures on the annuity date, when the owner must decide whether to take the cash value as a lump-sum distribution or as a set of annuity payments for the remainder of the owner’s life. An early payout occurs when you surrender the policy before the annuity date.

What are single premium immediate annuities?

A single premium immediate annuity (SPIA) is one of the simplest types of annuity contracts. With a SPIA, you make a single large deposit with an annuity company and your monthly payments begin immediately.

How does a single premium immediate annuity work?

A single premium immediate annuity, or SPIA, is a contract in which you pay an insurance company a lump sum of money up front, known as a premium, in exchange for guaranteed, periodic payments for life or over a set period of time. A SPIA can begin paying out almost immediately after you purchase it or within the year.

What is the difference between an immediate annuity and a deferred annuity?

An immediate annuity, also known as an income annuity or single premium immediate annuity (SPIA), is a contract between you and an insurance company designed for income purposes only. Unlike a deferred annuity, an immediate annuity skips the accumulation stage and begins paying out income…

What happens if you break an annuity contract?

Annuities are tax-deferred insurance contracts that provide you with immediate or deferred monthly income benefits. An annuity contract may last for several years or even for life. You can break an annuity contract in certain circumstances, although when you do so you may end up having to pay penalty fees and tax penalties.

What are the pros and cons of single premium annuities?

Single premium immediate annuities (SPIAs) are purchased with a lump sum of money and offer a guaranteed source of income for retirement. SPIAs are not always right for a person.