Defined terms for the annuity market and lifetime income landscape.
A single premium immediate annuity (SPIA) is a lifetime income arrangement in which the contract owner pays a one-time premium to an insurer in exchange for periodic income payments that begin within one year of purchase and continue for the contract owner's lifetime or another specified structure.
A split annuity is an arrangement in which an individual allocates capital across two annuities at the same time — typically an immediate annuity paying current income and a deferred annuity accumulating for future use — to produce defined income now while preserving growth for later.
A step-up provision is a rider mechanic that periodically resets the benefit base — or another rider-defined value such as a guaranteed minimum death benefit — to a high-water mark of the contract's account value at specified contract anniversaries, locking in past investment performance.
A straight life annuity is a lifetime income contract paying income for the contract owner's lifetime and stopping at death, with no beneficiary payments and no guaranteed minimum payment period.
Stretch provisions were the pre-SECURE Act rules that allowed a non-spouse beneficiary of an inherited retirement account or annuity to take required minimum distributions over the beneficiary's own life expectancy, extending tax deferral across the beneficiary's remaining lifetime.
