A History Of The Single Premium Immediate Annuity
Jeff Affronti
Fixed Annuity & Life Wholesaler | SPIAquote.com | AnnuityExperts.com FSD Insurance Services | Traditional insurance products for the risk averse. New business & servicing. Experienced, reliable, available & responsive!
Single Premium Immediate Annuity (SPIA) is a financial product that has a long history dating back to the Roman Empire. Below, we will discuss the history of SPIA, its timeline, and some examples of its use.
The earliest known example of annuities dates back to ancient Rome, where individuals would pay a lump sum to a financial institution in exchange for regular payments for life. This practice continued through the Middle Ages and into the Renaissance, where annuities were sold by European governments to finance wars and other expenses.
In the United States, annuities were first introduced in the 18th century. In 1759, a company named the Presbyterian Ministers’ Fund was established, and it began offering annuities to clergymen and their families. By the early 19th century, annuities had become more widespread and were used as a means of retirement income for the middle class.
The modern SPIA as we know it today was developed in the early 20th century. In 1912, Metropolitan Life Insurance Company introduced a product called the "Life Income Annuity." This product allowed individuals to pay a single premium in exchange for a guaranteed income for life. Other insurance companies soon followed suit, and SPIAs became a popular way for individuals to create a reliable income stream in retirement.
Throughout the 20th century, SPIAs continued to evolve and became an important part of retirement planning. In the 1980s and 1990s, SPIAs became more popular as interest rates increased, making them a more attractive option for those seeking a reliable income stream.
Today, SPIAs are still widely used as a means of retirement income. They provide a guaranteed income stream that is not affected by market fluctuations or other external factors. SPIAs can be purchased from insurance companies, and the income payments can be structured to meet the needs of the individual purchaser.
Here are some examples of SPIAs and how they have been used throughout history:
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- In ancient Rome, wealthy individuals would purchase annuities to ensure a steady income stream in retirement.
- In the 18th and 19th centuries, annuities were commonly used as a means of retirement income for the middle class.
- In the early 20th century, Metropolitan Life Insurance Company introduced the "Life Income Annuity," which was the precursor to the modern SPIA.
- During the 1980s and 1990s, SPIAs became more popular as interest rates increased, making them a more attractive option for those seeking a reliable income stream.
- Today, SPIAs are still widely used as a means of retirement income, providing a guaranteed income stream that is not affected by market fluctuations or other external factors.
In conclusion, the Single Premium Immediate Annuity has a long history dating back to ancient Rome. It has evolved over time and has become an important part of retirement planning. SPIAs provide a guaranteed income stream that is not affected by market fluctuations or other external factors. As such, they continue to be a popular choice for individuals seeking a reliable income stream in retirement.
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Private Wealth | Managing Partner | Family Office
1 年Enjoyed this one . Fascinating stuff from the past with relevance for today . Cheers
The “Annuity Maestro”/Nationally Published Author/Immediate Annuity Agent and Agent Trainer Emails: [email protected] or [email protected]
1 年Jeff very good.?But let’s not forget why/when immediate annuity popularity really soared in the USA.?At the time of MetLife’s annuity introduction (1912), industry wide annuity premiums only averaged 1.5% of all life insurance industry premiums, barely a blip. ?But, in the 1930s, banks started to fail and after the Fed Govt seized the gold in 1933, the fear of “going broke” was palpable. ??People rushed to buy immediate annuities from the more stable life insurance industry (by-the-way, as I write this, the exact same thing happening right now). Annuity Stats:?68% of all annuity premiums received by the life insurance industry (26 large carriers) during the years 1913 – 1937 were received from 1933 – 1937.?From 1934 – 1936 new annuity premiums actually EXCEEDED new life insurance premiums (TNEC Data).??With thier LIVES CHANGING in the "present time" and not fear out of what may happen in the 1960s, people spoke with their pocket books.??No matter what “modern financial advisors” say today re annuities, SAFETY still remains the number one annuity consumer purchase reason.??