Single Premium Immediate Annuity or SPIA allows for a specific payout period starting from the moment of transfer into this account. This is used when a prolonged income has to begin for whatever reason and will continue upon one of many options including five-year period certain
10 year period certain, 20 year period certain and Life. This can transfer to more than one life.
Single Premium Deferred Annuity this is an annuity that is bought or transferred with a single premium payment and is not distributed until some future event.
There is no limitation as to the number of annuities one can have in fact you can use one portion of an annuity to gather the benefits of a deferred annuity.
For the most part the best annuities are the simplest to understand. Anything that has everything to do with annuities is how the insurance company makes money on the deal. This is been broken down several ways
· Participation rate. This is how much growth in an index that you will be able to share. If you have 50% participation rate and the market climbs 20% you will only realize half of that growth. The rest is shared with the insurance company.
· Caps are limitations to the amount of growth the insurance company will allow. For example, if you have a 2% In a month if the actual market climbs 10% you will only see 2% of it. The insurance company gets the rest.
· And you will guaranteed rate. Usually used for a multiyear guarantee. If the insurance company is offering 3% they have bonds that are making at least 5%.