The Annuity Pitch Skips One Number: What a $250,000 Policy Costs Your Heirs The life only single premium immediate annuity (SPIA) has been touted as a way for retirees to secure a steady income stream.
However, when buyers pass away within two years of purchasing these contracts, their heirs receive nothing. The remaining principal stays with the insurer.
The math on SPIAs may seem appealing in today's low interest rate environment, but it reveals a more insidious reality: buyers are essentially subsidizing each other through these contracts.