Classically used as a method of increasing retirement savings, the SPDA provides a guaranteed amount once the investor has retired and instructs the insurance company to make payment.

A SPDA is usually best for the investor who has a long-term accumulation plan in mind. It can also be good for a high net-worth investor or one who has maxed out other tax-free retirement vehicles such as a 401(k) or IRA.

Options exist for payment to the investor and his or her spouse, or for payments after the death of the original owner.

The SPDA annuities are considered risk-averse investments that are most suitable for people entering or nearing retirement. But, while there are conditions under which the contract can be cancelled, money placed in this type of annuity should not be considered liquid.