Your Step-By-Step Guide to Investing a Life Insurance Payout Into an SPA

What’s a Single Premium Annuity (SPA)?

Short for Single Premium Annuity, an SPA is a way to turn a lump sum of money into a steady, predictable income stream. While SPAs are often associated with retirement, they can be useful anytime you want financial stability and certainty — especially when you’ve received a large payout, such as proceeds from a life insurance policy.

At Serenia Life, we offer two very different annuity products for two very different purposes:

1. Single Premium Annuity (SPA) converts a one-time investment into guaranteed, regular income. It can help replace income, support everyday expenses, or provide long-term financial security — whether or not retirement is the immediate goal.
2. Guaranteed Interest Annuity (GIA) allows you to invest money in a low-risk option for short- or long-term goals, focusing on growth rather than income.

Today, we’ll be focusing on the SPA (a.k.a., a guaranteed stream of income), and how you can use a life insurance payout to fund it.

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Benefits of investing a life insurance payout into an Single Premium Annuity (SPA)

When someone receives a life insurance payout, the decisions that follow can feel just as important as the benefit itself. Turning that lump sum into a plan can help create stability, confidence, and long-term security.

One option worth considering is investing the proceeds into a Single Premium Annuity — here’s why it can make sense.

1. It turns a lump sum into steady income

Instead of worrying about how fast the money might run out, a Single Premium Annuity can convert a life insurance payout into predictable income you can count on.

2. It takes the pressure off decision-making

Managing a large payout can feel overwhelming. An annuity simplifies things by creating a structured plan, so you’re not constantly deciding when or how much to withdraw.

3. It helps protect against outliving the money

If income is guaranteed for life, you don’t have to stress about market swings or worrying about your money running out — the payments keep coming as long as you live.

4. It brings stability during an emotional time

After a loss, financial simplicity matters. An SPA offers reassurance and consistency when everything else may feel uncertain.

5. It can complement other investments nicely

With reliable income in place, other savings or investments can stay invested for growth, rather than being tapped for everyday expenses.

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Using a Single Premium Annuity (SPA) to Fund Retirement

For many Canadians, retirement income isn’t as straightforward as it once was. With fewer workplace pensions and longer life expectancies, the challenge isn’t just saving for retirement — it’s knowing how to turn savings into reliable income that lasts.

This is where an SPA comes in. This type of annuity allows you to convert a lump sum (e.g., savings, RRSP/RRIF funds, or even a life insurance payout) into a guaranteed stream of income.

That income can be paid monthly, quarterly, or annually, and can be set to last for a fixed period or for the rest of your life.

One of the biggest advantages of using an SPA in retirement is certainty. Your payments don’t depend on market performance, interest rate changes, or how long you live. That predictability can make it easier to budget for everyday expenses like housing, groceries, and health care — and can help reduce the stress of worrying about outliving your money.

An SPA can also work alongside other retirement income sources. Government benefits, pensions, and investment withdrawals can cover some expenses, while the annuity provides a stable “paycheque” that helps anchor your overall plan. For many retirees, this balance between guaranteed income and flexible investments offers peace of mind and flexibility.

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Case Study: Using a Life Insurance Payout to Create Reliable Retirement Income

When Linda retired at 65, she didn’t have a workplace pension to rely on. She had saved through her RRSPs over the years, but after losing her spouse, she also received a life insurance payout of $500,000 — a meaningful amount that came with a big question: How do I make this money last?

Linda decided to place $400,000 of the payout into a Single Premium Annuity (SPA), keeping the remaining $100,000 accessible for unexpected expenses.

She began receiving monthly payments in the amount of $2,200 immediately – which will continue for the rest of her life*, regardless of market performance or how long she lives.

This guaranteed income helps Linda cover her core expenses — housing, groceries, utilities, and any healthcare costs not covered by her province — creating a dependable “paycheque” she counts on each month. Government benefits and the rest of her savings support any extra expenses and future needs.

By using part of her life insurance payout to fund an SPA, Linda created stability first — and flexibility second. The result was a retirement plan that was predictable and built to last.

*Illustrative only. Actual income depends on age, interest rates, annuity options selected, and insurer pricing at the time of purchase.

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How to move a life insurance payout into a Serenia Life Single Premium Annuity (SPA)

Here’s a simplified, step-by-step guide for how to move a life insurance payout into a Single Premium Annuity (SPA) with Serenia Life. Download the guide.

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What options should you consider when selecting a Single Premium Annuity (SPA)?

When it comes to SPAs, there are a few different options to consider – and each one is very specific to a person’s unique needs. While it can feel a bit confusing initially, start by asking yourself the following questions:

• Do I need guaranteed income for life? A Single Life Annuity provides guaranteed income for as long as you live. You can also add optional guaranteed periods so payments will be passed along to your loved ones if you pass away early.
• Am I looking for lifetime income for both myself and my spouse? Designed for couples, the Joint & Last Survivor Annuity continues to pay out an income as long as one person is alive, providing ongoing financial support to the surviving spouse.
• Do I only need income for a certain period of time? The Term Certain Annuity allows you to choose a term that works for you (e.g., 5, 10, or 20 years), which can be useful for bridging income needs or covering specific expenses.
  Remember, this is just a starting point.

A Serenia Life advisor can help you determine which option fits your situation — you don’t have to navigate this alone.

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Why choose a Serenia Life Single Premium Annuity (SPA)?

As a member-based organization whose roots go back nearly 100 years, we encourage kindness by sharing our profits through community outreach, fundraising, and unique member benefits that help Canadians support their family, their community, and the causes they care about. The more we grow, the more we can give.

We provide members with access to a growing collection of member benefits that make a positive impact on their lives and the lives of others. Benefits, such as:

• $2,500 post-secondary scholarships
• Up to $600 towards a fundraiser, and up to $400 to cover volunteer-related expenses in Canada
• Financial support when you hire a lawyer to draft or update your will
• And much more!

View a full list of our member benefits.

Let us help

Turning a life insurance payout into a steady income plan sounds like a great idea – but it can also feel overwhelming, especially during an already emotional time like the death of a loved one. The good news is, you don’t have to figure it out on your own. Our team of licensed advisors is here to walk you through your options, answer your questions, and help you decide whether a Serenia Life SPA is the right fit for your goals.

When you’re ready, we’re here to help you take the next step with clarity and confidence.