Single Premium Immediate Annuity · Also called: immediate annuity, exclusion ratio, income floor
A contract that converts a lump sum into guaranteed income for life, starting right away. It trades access to the money for protection against outliving it.
When bought with after-tax money, part of each payment is a tax-free return of your premium. That share, the exclusion ratio, is the premium divided by the total payments expected over your life expectancy. When bought inside an IRA, payments are fully taxable.
A joint-and-survivor option continues income to a surviving spouse in exchange for a lower starting payment.