Benefits of a Single Premium Immediate Annuity (SPIA)

single premium immediate annuity
Figure 1. Single Premium Immediate Annuity

SPIA: Single Premium Immediate Annuity

SPIAs allow you to convert registered or non-registered capital into a regular stream of income, guaranteed for the life of one or two annuitants and for a specified period of time, if desired.

What are the key benefits of a single premium immediate annuity?

The key benefits of a single premium immediate annuity include:

  • Guaranteed income
  • Your future income is guaranteed, and you will know exactly how much income you will receive for life or for the period chosen. With a SPIA, there's no danger of your outliving your capital.

  • Easy to manage
  • You don't need to be concerned about ongoing investment or management decisions. Once you purchase a SPIA, the regular stream of income is guaranteed.

  • Tax-efficient income
  • A SPIA immediately converts your capital into a stream of tax-efficient income.

Additional Benefits of a SPIA

Along with competitive rates and a wide range of options, SPIAs provide additional benefits to help you meet your income goals:

  • Potential creditor protection
  • As an insurance product, a SPIA gives you the ability to name a family member as your beneficiary. Accordingly, your investments may be protected from creditor claims. A number of conditions or restrictions could apply. Please consult a legal advisor for more information about creditor protection.

  • Estate planning
  • Since a beneficiary can be named within a SPIA, the probate process, as well as the costs and delays associated with probating a will, is bypassed.

What is the minimum issue age for a spia?

The minumum issue age is for a spia is 18 or 19 (depending on the Province) to follow the age of majority law.
For locked-in pension funds, the minimum issue age is based on the Province and fund source

(i.e.: LIRA, LRSP, RLSP, LIF, LRIF, RLIF, PRIF and RPP). For example, a client must be 50 or older for funds received from an Alberta LIF.

What is the maximum issue age for a spia?

The maximum issue age for a spia is 90 for registered plans
and 85 for non-registered plans, though some companies will issue up to age 90.

What is the minimum deposit for a spia?

The minimum deposit for a spia depends on the insurance company. The minimum deposit can range from $10,000 - $50,000

What plan types are available for spia?

  • Single Life Annuity with or without a Guaranteed Period
  • Joint and Survivor Life Annuity with or without a Guaranteed Period

What are the payment frequency options for a spia?

You can choose from: Annual, Semi-annual, Quarterly and Monthly payment frequency options.

What guaranteed period options are available?

SPIA income is guaranteed for the life of the annuitant. However, the annuitant can choose an additional guarantee for payments to continue after his death to his beneficiaries. The annuitant can choose from a specified length of time (e.g. 0, 5, 10, 15, 20 years) for non-registered plans or for registered plans is to age 90.

Indexing a SPIA

Annuity income payments can increase at a fixed annual rate, up to 4% for registered funds.

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Phil Barker

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Phil Barker

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