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Immediate Annuities

A Single Premium Immediate Annuity (SPIA) is a financial instrument purchased from an insurance company with single premium payment. In exchange for this lump-sum payment, the insurance company agrees to pay the buyer a series of fixed-income payments for life, for a specified period of time or both. Income payments from SPIA's generally begin within 30 days from the date the policy is issued, but can start later.

Because the buyer (also called the "annuitant") of a SPIA has exchanged a lump-sum payment for these income payments, SPIA's do not provide a cash or surrender value and are considered "irrevocable" contracts, meaning that they cannot be changed or modified in any way once they have been issued by the insurance company.

SPIA income payments vary based on a many different factors. These factors include both the gender and life expectancy of the annuitant, along with current interest rates and the income payout option elected.

A "fixed rate" annuity is one variation in a broader family of traditional, tax-deferred annuities. Other varieties of tax-deferred annuities include: variable annuities, equity-indexed annuities and multi-year guarantee annuities. While each of these types of annuities share many similarities, the primary difference between each is the method by which interest is both earned and credited.

A "Variable" annuity is a contract between you and an insurance company. Although it shares many similarities with fixed rate and/or equity-indexed annuities, a variable annuity has three major distinctions from these annuities: risk, fees and often how the death benefits are paid. Setting aside these differences, a variable annuity can look, act and feel much like a more traditional fixed or indexed annuity.

The introduction of the "equity-index" has revolutionized the insurance and annuity industry in recent years. Like other tax-deferred annuities, the equity-index annuity is a contract between you and an insurance company; however, it is considered neither a fixed rate nor variable annuity.

A Multi-Year Guarantee Annuity (MYGA), also known as a "Fixed Rate Annuity," is a variation of traditional tax-deferred annuity. Just like all other forms of annuities, MYGA's are offered by a variety of different insurance companies. While similar to traditional deferred annuities in many ways, the MYGA was designed to compete with other savings instruments such as bank CD's and Treasury Bills.