What fees do you pay in buying a SPIA?

There is no direct cost to you of purchasing an immediate annuity (also known as a Single Premium Immediate Annuity or SPIA). That doesn’t mean there isn’t an indirect cost though. Insurance companies generally pay a commission to the agents and advisors who sell their product. Commissions for SPIAs are generally under 5%, which is lower than those paid for other kinds of annuities. And, over a lifetime, it amounts to less than the 1% per year that many financial advisors charge you.

Make sure you know how much and from whom the person advising you on the immediate annuity purchase is being paid.

Recently, Blueprint Income has entered into agreements with select insurers to take a lower commission (as little as 1%), in exchange for higher payouts being passed along to the end consumer.

One final thing to keep in mind: the end payout you see is net of any fees paid by the insurance company. As a result, the highest-rated company with the highest payout is generally the right insurer to buy from, regardless of the commission that the sales agent is being paid.

info icon

Head to the SPIA Guide to learn more about the product, how it works, and whether it makes sense for your retirement.