What Is a SPIA?

A SPIA turns a lump sum into a monthly check that starts within 30 days. You pay one premium to an insurance company; they send you guaranteed income for the period or lifetime you select at purchase. Once funded, you cannot get the principal back.

That is the whole product: one payment in, income out. No accumulation phase, no cash value to withdraw, no market exposure. Your monthly amount is fixed at purchase based on your age, the payout option you choose, and interest rates on the day you buy.

Insurance Geek runs SPIA illustrations across 30+ A-rated carriers on the same premium, age, guarantee period, and state. Below: how payouts are calculated, your payment options, sample income figures, tax treatment, and who a SPIA fits.

Key Takeaways

How a SPIA Works

A SPIA is a contract between you and an insurance company. You make one lump-sum payment. The carrier begins monthly income within 30 days, guaranteed for the option you selected.

Four inputs set your payment at issue:

• Age and gender: Older buyers receive higher monthly payouts per dollar because the carrier expects fewer years of payments.
• Interest rates: Higher rates at purchase mean higher income for the same premium.
• Guarantee period: Life-only pays the most. Adding a period certain or joint life lowers the monthly check.
• Premium amount: A larger deposit produces a larger check. The income rate per dollar follows the same formula.

You choose the payout structure once, at purchase. That structure cannot be changed after the contract is issued.

SPIA Payment Options

Your payout option determines your monthly check and what happens when you die.

• Life only: Highest monthly payment. Income stops at your death with nothing left to beneficiaries.
• Joint life: Payments continue until both you and your spouse die. Lower starting payment than life only. You can elect 100% continuation for the survivor or a reduced percentage — 75% or 50% — for a higher initial benefit.
• Life with period certain: Income for your lifetime. If you die before the period ends (typically 5, 10, or 20 years), payments continue to beneficiaries for the remainder. The most common choice for retirees who want lifetime income with some death benefit protection.
• Fixed period: Pays for a set number of years whether you are alive or not. Higher monthly income than lifetime options, but income stops when the period ends — even if you are still living.

Most SPIAs pay a fixed dollar amount each month. Optional cost-of-living adjustment (COLA) riders increase payments annually — typically 1–3% — but reduce your starting check by roughly 15–20%. Worth comparing both on an illustration before you choose.

For a full breakdown of how each structure affects beneficiaries, see the annuity payout options guide.

How Much Does a SPIA Pay?

Your monthly income is quoted before you buy. Rates shift with interest rates, age, state, and guarantee period — always run a current illustration on your profile.

Sample from our May 2026 income annuity survey: male, age 65, Ohio, $250,000 premium, 5-year period certain, monthly income payout.

The spread between the highest and lowest carrier in this run is $72 per month — $864 per year, locked in for life. Carrier rankings change monthly. Compare fresh quotes on the same assumptions before you commit.

For income across different premiums, ages, and guarantee periods, see the SPIA rates page. Carrier financial strength comparisons are on best SPIA companies.

Qualified vs. Non-Qualified SPIAs

Where the premium came from determines how each payment is taxed.

• Qualified: Funded with pre-tax dollars — IRA rollovers, 401(k) balances, or other tax-deferred accounts. Every dollar of monthly income is taxed as ordinary income.
• Non-qualified: Funded with after-tax dollars from savings or taxable accounts. Only the interest portion of each payment is taxable. The principal returns tax-free through an exclusion ratio the carrier provides at issue. Consult your CPA on how the ratio applies to your situation.

Inherited contracts and annuitization rules are covered on how annuities are taxed.

Is a SPIA Right for You?

Before you commit

Before you fund a SPIA, walk through the same checks we run on every case:

• Liquidity: Can you fund the SPIA without draining reserves you might need in the next 5–10 years?
• Payout option: Does life only, joint life, or life with period certain match what you want to happen at death?
• Same assumptions: Are carrier quotes on the same premium, age, guarantee period, and state?
• Carrier strength: Does the AM Best rating fit a 20- or 30-year income commitment at your deposit size?

Fill out the form below with your premium, age, guarantee period, and state. We compare SPIA payouts across the leading carriers available to you and follow up with the best-fitting options. You do not have to sort through illustrations yourself — that is what we do every day.

Compare SPIA illustrations

Compare SPIA payouts on the same premium, age, guarantee period, and state — one of our licensed agents runs the comparison and follows up with your options.

Conclusion

A SPIA does one thing: converts a lump sum into guaranteed monthly income that starts within 30 days. If that matches what you are looking for, the decision comes down to payout option, tax treatment, and which carrier pays the most on your specific profile.

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