Speak with a Registered Agent: 1-866-223-2121

Speak with a Registered Agent: 1-866-223-2121

Most Protect Their Immediate Annuities


While attending the Financial Planning Association’s annual convention in San Diego in mid-September, I happened to attend a presentation where an annuity expert described the advantages and disadvantages of single-premium immediate income annuities, or SPIAs. SPIAs are contracts where you pay an irrevocable lump sum to a life insurance company and the insurer pays you a guaranteed income—for as long as you live, or (optionally) as long as either you or your spouse is living.

The expert knew his subject, no question about it. But he also helped perpetuate a myth about income annuities—a myth that unfortunately makes many people unnecessarily afraid of buying them.

He said that when you buy an immediate annuity, if you happen to die within a few years of buying the contract, you forfeit whatever portion of your investment hasn’t been paid to you yet.

That’s true—but only if you purchase a pure life annuity. Most people, however, do not buy pure life annuities. Instead, they protect themselves from the forfeiture scenario by modifying their contracts.

Some buy so-called “life with period certain” SPIAs, which means that payments will continue to their beneficiaries if they die before receiving monthly payments for a specific period, such as 5, 10, 15 or 20 years. Others buy “life with cash refund” SPIAs, which means that their beneficiaries will receive a lump-sum refund of the difference between the original investment and the amount already paid out.

Many people continue to avoid SPIAs, which can serve as personal pensions and provide anchors of financial security in an insecure world, because they think they might get hit by a bus and lose most of their money. But that’s not necessarily so.

Written by Kerry Pechter

For more information about the product mentioned in this article contact us here:

Newest Blog Posts

Information Request Form

If you have questions or would like more information, please complete this form and a licensed professional will be happy to help. For the fastest response, please select 'Phone' as your Contact Preference.

By providing your information and clicking 'Submit' above, you acknowledge that you have read and agree to this site's privacy policy. You also provide your consent to be contacted at the email address or phone number provided above (including any wireless number) by licensed agents or representatives from or on behalf of AFYI Holdings Group, LLC and other companies to provide the information requested and/or offer annuities or financial products. You understand that these calls or SMS messages may be generated using an automated telephone dialing system, a pre-recorded message, or artificial voice. Consent to receive such messages is not a condition to purchase any goods or services. You may opt out at any time by following the instructions in the messages you receive.  Receiving quotes and information through our website is free, and you are under no obligation to purchase any goods or services as a result of this request. You affirm that you are the subscriber of the provided telephone number or that the subscriber authorized you to provide the number. Message and data rates may apply. AFYI Holdings Group, LLC is committed to respecting your privacy and adhering to all applicable laws and regulations, including the Telephone Consumer Protection Act (TCPA).