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Recently, a life insurance agent wrote me about my railings against the SECURE act, which now allows annuities in 401(k) plans. He politely – and accurately – noted my "unfavorable opinion towards annuities (and by extension insurance sales reps)."

He suggested, however that my attacks on annuities may be too broad. After reading his email, I agreed.

What I advise against are variable, indexed (i.e., equity-indexed and fixed-indexed), and other similar annuities that pay high commissions, have high surrender charges or have high annual fees. Those fees make it hard to impossible for consumers to come out ahead, and the complexity of those products make them exceedingly difficult for consumers to properly analyze them.

A lesser-known product, paying significantly lower commissions, is a single-premium immediate annuity (SPIA). These provide a guaranteed income for life in return for a one-time cash investment. For a one-time premium of $120,000, one company will provide a 65-year-old woman with an annual lifetime income of $8,040.

A SPIA locks in an income for life that isn’t subject to market fluctuation. They can be wonderful vehicles to protect unknowledgeable investors from themselves. If, for example, someone in their sixties with a limited income, few assets, and little financial knowledge inherits $150,000, purchasing an SPIA could be an excellent choice.

Yet in almost 40 years, I have only had one client come to me with a previously purchased SPIA and had no client purchase one when I’ve offered them as an option. Why? There are three reasons.