A single premium immediate income contract is designed to pay guaranteed periodic income payments over a fixed period of time.

Presidential's single premium immediate income contract offers a great deal of flexibility in fixed-period income planning. The contract may be purchased with funds from an IRA, tax-sheltered annuity, 401(k), pension or profit sharing plan, or from some non-qualified source of funds, such as a bank account or the proceeds from a mutual fund that has been cashed out.
Fixed income periods can be as short as 24 months, or as long as 5, 10, 15, 20 or more years. Payments can be made monthly, quarterly, semi-annually or annually, either to the annuitant under the contract or to anyone else the owner of the contract may designate as payee. Payments under an immediate income contract may be level for the period specified in the contract, or they may include an annual cost-of-living adjustment of from 1% to 6%.

This contract is an ideal vehicle to use to manage repayment of a fixed-period debt obligation, such as a car loan. It can also be used to manage payment of insurance premiums required for fixed periods, such as with 10-, 15- or 20-year level term insurance policies or long-term care insurance plans purchased under either a 10- or 20-year premium payment structure. In addition, the contract is ideal to meet the requirements of a business to make deferred compensation payments to a retired key employee.

A single premium immediate annuity is designed to provide guaranteed, periodic income payments over the lifetime of one or two individuals, such as a husband and wife or parent and child. The contract may be purchased with funds from an IRA, tax-sheltered annuity, 401(k), pension or profit sharing plan, or from some non-qualified source of funds, such as a bank account or the proceeds from a mutual fund that has been cashed out.

The payment options available offer a great deal of flexibility in income planning. Payments may be made on a monthly, quarterly, semi-annual or annual basis. Single-life or joint-life payments may be level or may include an annual cost-of-living adjustment of from 1% to 6%. In addition, joint-life payments may be structured to be level over the entire lifetime payment period, or to provide reduced payments of 75%, 67% or 50% of the initial payment amount to the survivor when one of the annuitants dies.

Sometimes proper planning suggests purchase of a single premium immediate annuity to provide income for life only. In this case, when the last annuitant-payee dies, payments stop entirely, even if death occurs shortly after the payments begin. Other times, proper planning suggests lifetime income payments combined with the guarantee of a minimum number of payments to either an annuitant-payee or designated beneficiary. Guaranteed payment periods may run for 5, 10, 15, 20 or more years. Alternatively, an immediate annuity may be purchased to guarantee payments in an amount equal to at least the premium used to initially purchase the annuity. Once that amount has been recouped, annuity payments would stop.

A single premium immediate annuity is an excellent vehicle to provide guaranteed income to meet any fixed expenses in retirement, such as for life, health or long-term care insurance premiums and mortgage or rent payments. A single premium immediate annuity is also an excellent vehicle to use to turn accumulated qualified plan funds into retirement income or for the trustee of a pension plan to use to provide retiring employees with their accrued pension benefits.