Payment Options Available
Principal offers multiple payout structures to match your goals. Each option trades off between higher payments now vs. protection for beneficiaries.
Income Projections by Age & Premium
Monthly payment amounts for Life Only option. Older ages receive higher payouts due to shorter life expectancy.
| Age | $50K Premium | $100K Premium | $250K Premium | Annual % |
|---|---|---|---|---|
| 65 | $275 | $550 | $1,375 | 6.60% |
| 70 | $307 | $614 | $1,535 | 7.37% |
| 75 | $350 | $700 | $1,750 | 8.40% |
| 80 | $415 | $830 | $2,075 | 9.96% |
| 85 | $505 | $1,010 | $2,525 | 12.12% |
Breakeven Analysis
How long it takes to receive your premium back in payments. Living beyond breakeven means you've "won" versus keeping money in a savings account.
$100,000 Premium, Age 70, Male (Life Only)
Cumulative Payments Over Time
The breakeven occurs at year 13.6 (age 83.6). Living to 85 means receiving $147K total—a 47% return on your $100K premium.
Pros & Cons
Advantages
- Highest payout rate in our comparison (7.37% for age 70 male)
- A+ rated carrier with strong financial strength
- Flexible payment options including joint and period certain
- Simple structure with no ongoing fees or management
- Payments never decrease regardless of market conditions
- Eliminates longevity risk—can't outlive your income
Trade-offs
- No liquidity—cannot access lump sum after purchase
- No inflation protection (fixed dollar payments)
- Life Only option leaves nothing to heirs if you die early
- Cannot change payment option after contract starts
- Better alternatives if life expectancy is below average
- Opportunity cost if investment returns exceed 7.37%
About Principal Financial Group
Principal Financial Group has been providing retirement and income solutions since 1879. As one of the largest providers of employer-sponsored retirement plans, they manage over $500 billion in assets for more than 31 million customers worldwide.
Important Considerations
Before You Buy
- Irreversible Decision: Once purchased, you cannot cancel or change your SPIA. This is a permanent exchange of a lump sum for lifetime income.
- No Emergency Access: If you need a lump sum for medical expenses or other emergencies, this money is not accessible.
- Inflation Impact: Your $614/month has the same purchasing power as $400/month after 20 years at 2% inflation.
- Shop Around: A 5% difference in payout rate means $30+ less per month. Always compare multiple carriers.
- Tax Implications: Part of each payment is tax-free return of principal (exclusion ratio), part is taxable interest. Consult a tax advisor.