Glossary

SPIA

An annuity bought with one lump sum that starts paying guaranteed income within a year, often for life, in exchange for giving up access to the money.

Also called: single premium immediate annuity, single-premium immediate annuity, income annuity

A SPIA (single premium immediate annuity) converts a lump sum into a stream of guaranteed payments that begin within a year of purchase, often within a month. Payments can last for one life, for two lives or for a fixed period, and the insurer bears the risk that you live longer than expected.

The payment depends on your age, sex, interest rates and the payout option. A life-only annuity pays the most per dollar but stops at death; adding a period certain, a cash refund feature or a joint-and-survivor option lowers each payment. Hypothetically, if an insurer quotes a 70-year-old $600 a month for life on $100,000, she recovers her principal in about 14 years, and payments continue as long as she lives. Part of each payment from a non-qualified SPIA is a tax-free return of principal under the exclusion ratio.

The trade-offs: most SPIAs are irrevocable, there's usually no cash value to withdraw, and payments are typically fixed, so inflation erodes them unless you buy a cost-of-living increase at a lower starting payment. Supporters see SPIAs as insurance against outliving savings; critics point to the lost liquidity. See Single premium immediate annuities (SPIAs): how they work and the annuity payout calculator.

Last reviewed October 4, 2026

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Related terms

Immediate annuity An annuity bought with a lump sum that starts paying income within about a year, for life or a set period, in exchange for giving up access to the money. Period certain An annuity payout feature that guarantees payments for a set number of years, paying a beneficiary if the annuitant dies before that time is up. Life-only annuity An annuity that pays income for one person's lifetime and stops at death, with no refund or payments to heirs, in exchange for the highest payout. Joint and survivor annuity An annuity that pays income for as long as either of two people lives, often at a reduced amount after the first death, such as 50% or 100%. Exclusion ratio The fraction of each annuity payment treated as a tax-free return of the buyer's own money, found by dividing cost basis by expected total payments. Annuitization Converting an annuity's account value into a stream of guaranteed payments for life or a set period, usually giving up access to the lump sum.

Related guides

How annuity rates are set and why they move Annuity rates come from an insurer's bond earnings minus costs and profit, plus mortality for income annuities. Why they move with bond yields and competition. Single premium immediate annuities (SPIAs): how they work A SPIA turns a lump sum into income that starts within a year. How payout options, pricing, inflation and taxes work, and who a SPIA suits and doesn't.

Related annuity companies

Brighthouse Financial MetLife's former retail annuity arm, known for Shield index-linked annuities; sold through advisors and agreed in 2025 to be bought by Aquarian Holdings. EquiTrust Life Chicago-based fixed and fixed indexed annuity specialist sold through independent agents; owned since 2025 by Amistad Financial Group. AM Best rates it B++. Symetra Bellevue, Washington insurer owned by Japan's Sumitomo Life, selling fixed, indexed, Trek index-linked and income annuities through banks and advisors. USAA USAA's life company sells a short list of fixed, fixed indexed and immediate annuities directly by phone and online, backed by an A++ AM Best rating.

Related tools

Annuity payout calculator Estimates monthly income from an immediate annuity, paid for a fixed period or for life on average U.S. mortality, to sanity-check real quotes.