If You Love a SPIA, Say Hello to a DIA

Today’s topic is a fun one. If you love a SPIA, then say hello to a DIA.

So, what is a SPIA and what is a DIA? These acronyms are thrown around all the time. SPIA stands for Single Premium Immediate Annuity. DIA stands for Deferred Income Annuity. And here is the key point. They are the same exact structure.

A SPIA is what you buy when you want income to start within 30 days up to one year. If you say, “Stan, I want income to start seven months from now,” great, that is a SPIA. If you want it in ten months, great, also a SPIA.

You can run SPIA quotes at The Annuity Man, all day long. Hundreds of thousands of quotes run every month, and one day, when we hit a million in a month, I will get a bell that says "ding ding ding." It just keeps growing.

But if you say, “Stan, I need lifetime income, but I need it to start in two years,” or four years, or fourteen months, once you cross the one-year line, the annuity magically transforms into a DIA.

Do not ask me why the annuity geniuses in some conference room decided to split the products at that one-year mark. They did not call me, which still hurts my feelings. But that is how it works.

You cannot logically say, “I like SPIAs, but DIAs, I do not know about those.” They are the same thing, Chester. The only difference is when you want the income to start.

How SPIAs and DIAs Actually Work

Single Premium Immediate Annuities and Deferred Income Annuities have the same structure. No moving parts. No annual fees. No market attachments. You are transferring the risk to the annuity company. You are saying, pay me for as long as I am breathing, or pay me and my spouse for as long as both of us are breathing if you set it up joint life. Regardless of how long we live.

That is it. Straight transfer of risk. Period. End of story.

And you can structure these contracts thirty different ways on the back end. You can say, “Stan, I do not want the money to vanish if my Learjet hits the mountain or my bass boat hits the tree.” You do not want the annuity company to keep the remainder if you die early.

No problem. We can structure it with a cash refund, installment refund, or a period certain. You can customize the SPIA and DIA quotes however you want, and you will see those options when you run them on my site.

Why Annuity Companies Are So Strong

Annuity companies have big buildings for a reason. They are for-profit businesses. There are no philanthropists in this industry. These companies are strong because they know exactly when you are going to die.

Property and casualty companies do not know when hurricanes are coming. I can say that because I live in Florida part-time. When hurricanes roll in, I roll out. I go to Las Vegas, our main office, and hope my house is still standing. The beach always seems determined to take it back.

SPIAs and DIAs are simple products, and simple products mean low commissions. This is the part most people do not believe, so let me repeat it. SPIA commissions are small. DIA commissions are small.

If you put $100,000 into a SPIA or DIA, you will see $100,000 on your statement. It is a net transaction. Yes, we get a little money so I can buy my wife more shoes, and her shoe game is elite, top tier, but the commission is tiny compared to complicated annuity products your agent may try to push. SPIAs and DIAs are simple. And they work.

What If You Die Before Deferred Income Starts?

Great question, and I heard it all the way from a guy in Poughkeepsie. Never been to Poughkeepsie, but I like the name.

What happens if you buy a DIA and die before the income starts? Does the annuity company keep your money? No. Because we will always build in what is called a return of premium.

If you put in one hundred thousand dollars, defer for four years, and die in year three, that one hundred thousand dollars goes to your listed beneficiaries. The annuity company does not keep it.

Is there any interest credited during the deferral period? No. There is not. This is about life expectancy, not interest rates. Interest rates play a minor role. Life expectancy drives the payout. That is why the older you are, the higher the payment, just like Social Security.

SPIA and DIA, The Same Product with One Difference

If you love SPIAs, say hello to their twin sibling, the DIA. They work the same because they are the same structure. The only difference is when you want the income to start.

If you want to learn more about either product, you can download the free owner’s manuals I wrote myself. You can run quotes. You can watch videos. And when you want help, contact us.

We are not a hammer looking for a nail. We are an edutainment company that sells a bunch of annuities, but only if they are right for you.