What Is A Single Premium Immediate Annuity?


Welcome back. I’m Stan, the annuity man.
Today, we’re going to talk about single premium immediate annuities. What is a
single premium immediate annuity? How does it work and should you own one? Alright. We’re going to dive into a lot of things concerning single premium
immediate annuities. We’re going to talk about what they solve for. We’re going to
go through a brief history of you know, where they started. You know, how long
have they been sold in this country. We’re also going to go through should
you even own one. And we’re going to go through the details of how you can make
that decision. In addition to that, I’m going to go through the benefits of the
product and the limitations. We’re also going to talk about how you structure an
immediate annuity because it’s customizable. You can do it a myriad of
ways. We’ll talk about that and then at the end, I’m going to talk about how it
fits in your portfolio if at all. And if it does, how to go about this making that
decision based on your specific situation. In addition, I’ve written a
book on single premium immediate annuities. Would love to send you a copy.
It comes in this package. And below, there’s a link that you can get that. Why
would you want to own a single premium immediate annuity? What a single premium
immediate annuity pretty much solves for is what I call income now. Which is a
guaranteed lifetime income stream that you can never outlive. And that income
stream can start as soon as 30 days. And as far out as one year. I call it a
personal pension. You have Social Security which is kind of like a pension.
Your company might provide a pension. This is a personal pension. It also feels
what I call your income floor. It’s an income gap of guaranteed income that you
can set up for you are you and your spouse and partner that you can never
outlive. What’s the history of SPIAs, how long have they been around? It’s very
interesting single premium immediate annuities have been around since the
Roman times. They were developed for the Roman soldiers to provide a lifetime
income stream for both them and their family. It’s really the only annuity type
that was sold in this country until about the 1950s. And it is the only
product. Annuities are the only product that solved for lifetime income. Meaning
you can never outlive your income. I always say there’s no ROI,
there’s no return on investment until you die. That’s a single premium
immediate annuity. So, what does single premium immediate annuities solve for?
They solve for lifetime income. You can never outlive it. It’s part of your
income floor. So, if you have a pension, you have rental income, you have dividend
income and you need that gap field, a single premium immediate annuity can
contractually do that. And remember, a single premium immediate annuity is your
own personal pension. For example, a client of mine the other day said, “Stan, I
need… My wife I may be $1,500 a month as a gap filler.” They were also kind of
preparing for inflation which immediate annuities can do that. Because you might
need extra money. And I call this type of money that guaranteed money that’s
hitting your bank account every single day. So they needed $1,500 a month. And so
what we did is we reversed engineered the quote to solve for $1500 a month starting in 30 days for the rest of both of their lives. And
when one of them died, the income stream continued uninterrupted and unchanged
for the second person’s life. And we also structured it that when they both died,
whatever money’s left in the account goes 100% to the beneficiaries. So, let’s
go over the benefits of single premium immediate annuity. Number 1, it’s a
lifetime guarantee. You can never outlive the income stream. Number 2 is
customizable. You can customize your choices. There’s no annual fees. You can
set it up joint with your spouse or partner or someone else. Save a
premium immediate annuities allow you to customize the quote. Allow you to
customize the income stream. There’s no annual fees. Single premium immediate
annuities provide the highest contractual guarantee payout of all
annuity times. They’re an efficient transfer of risk strategy. They’re easy
to understand and you can use single premium immediate annuities in an IRA, a
non IRA and a Roth IRA. Now with all annuity types, they have
limitations. Single premium immediate annuities has limitations as well. Let’s
talk about those. Number 1 is a very rigid contract. It’s a liquid. In other
words, you can’t have the payments start with a single premium immediate annuity.
And then call me up and say, “I don’t want to do that anymore. Send me the money.”
Think of it as like ripping the the knob off of water floss.
The waters is going to flow. Once the income stream starts, it’s going to hit
your bank account up for the rest of your life. So understand that. The other
limitation of a single premium immediate annuity is that it has no market growth
attachment. I actually feel that that’s a positive but some people think that
that’s kind of a loss of opportunity. Another limitation of single premium
immediate annuities is that the payments are static. They’re going to remain the same
unless you attach at the time of application what’s called a Cola
increase. A cost of living adjustment increase. But remember, annuity companies
have the big buildings for reason. They don’t give anything away. So, if you add
that type of increase to the income stream, they’re going to significantly lower
the payment. So, if you’re interested in a cost of living adjustment increase, I
would encourage you to have this quote both with the cost of living adjustment
increased and without. So you can see how the annuity companies price in that
increase to your income. Let’s go over how you structure the contract with the
immediate annuity. Remember, it’s a contract. So, you can have it joint life.
You can have it on your life. You can also have a for a specific period of
time which is called a Period certain. Or you could combine it. You could say I want it.
My life with a period certain. So, you just kind of have to tell me what you
want it to do. Always tell me there’s 2 questions with an annuity to buy is. What
do you want the money to contractually do? And when do you want those
contractual guarantees to happen? There’s one misconception about structured
annuities that I want to clear up. Most people think when you buy an immediate
annuity, a single premium immediate annuity and you die, the money goes poof
and the evil annuity company keeps it. That’s only 1 but about 30 ways to
structure. That’s called life only. That is the highest payout. But you don’t have
to do that. And the majority of people structured so there’s a lifetime income
guarantee that the annuity company is on the hook to pay. But also if you die, 100%
of any unused money goes to your list of beneficiaries. So, you can transfer the
risk to the annuity company with the peace of mind knowing that 100% of that
hard-earned money that you’re putting in that immediate annuity is going to go to
someone in your family. Let’s talk about quoting a single premium immediate
annuity. You’ve decided that it might be for you. How do you go about getting the
quote? Well first of all, understand that single premium immediate annuity
like commodities. There’s not one best single premium immediate annuities. You
quote all carriers. Think of it like this. It’s like a gallon of milk. When you buy
a gallon of milk at the store, it expires and goes bad after about 7 to 10
days. Same exact thing with a quote with an immediate annuity. You get the quote,
we send you the quote and 7 to 10 days later we would have to re-quote it
unless you move forward with the paperwork it’s like buying a plane
ticket. When you go buy a plane ticket, you don’t pick a carrier, you punch in
exactly what you want. And you get the best guarantee. Same exact thing with
single premium immediate annuities, quote all carriers for the highest contractual
guarantee for your specific situation. Finally, let’s talk about where a single
premium immediate annuity fits in your portfolio. Remember, the 2 questions.
What do I want the money to contractually do and when do I want
those contractual guarantees to start? So, if you answer I don’t need income, guess
what? You don’t need a single premium immediate annuity. But if you need
lifetime income, that’s where you need to start the quoting process and to see if
it fits for your specific situation. Also remember, the primary places that fits in
your portfolio is income. It’s a gap filler for income. It’s a pension that
you can never outlive. So, it’s not like an investment in the stock market or
stock market investments that can go up and down. This is a guaranteed income
stream that you can never outlive. Recently, I had a client that just was
very worried about putting too much money, an immediate annuity a single
premium immediate annuity. And I totally agree with that. You have to be very
careful on allocation and proportion. So, he wanted growth in the market but he
also wanted a guaranteed income floor. So, what we figured out was exactly the
income stream that he needed. We solved for that contractually with a single
premium immediate annuity. And then the rest of his money, he kept in the markets
which by the way, he’s a better investor because of that because he doesn’t have
to worry about that income floor because it’s contractually guaranteed with a
single premium immediate annuity. So, he got to have his cake and eat it too
because he stayed in the market, investing and he also had the guaranteed
income floor pension with a single premium immediate annuity. Now that we
covered what is a single premium annuities, go to the next video find out
what is a deferred income annuity. Also remember, I’ve written a book on single
premium immediate annuities. And you can go to the link below to get your free
copy. And by the way, it arrives in this package.

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