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The next classification deals with the way in which the annuity's purchase payment is made to the issuer. An annuity can be purchased with a single premium on either an immediate or deferred basis, or with level premiums and flexible premiums.

Single Premium Immediate Annuities (SPIA)

With this type of annuity, owners pay a single premium, and immediately receive payments, usually in monthly installments, as long as they live. Since payments stop at the owner's death, the purchase of a life annuity with a guaranteed payment period, known as a life annuity with period certain, might be considered. If the guaranteed payment period is 10 years, and the owner dies before collecting for the full period, the beneficiary would continue to receive the annuity payments until the end of the period.

Single premium fixed annuities often are well-suited for people who have:

  • Substantial savings or inheritances;

  • Lump-sum distributions from employer retirement plans or IRA Rollovers; or

  • Proceeds from the sale of a home or business.


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