[eweissenbach]

I worked in management for New York Life and Principal Financial Group for 25 years and have extensive experience with annuities. An immediate annuity can be set up in numerous ways.
The biggest payout would be a single payor no refund annuity - pays the annuitant monthly, quarterly, semi-annually or annually for life with all obligations ending at the death of the annuitant.
You can set up payments with guarantees of 10-20 or other multiples of years - the longer the guarantee the lower the payout. In other words the annuitant gets the payment for life, with the beneficiary getting the payment for the remaining number of years if the annuitant dies prior to the guarantee period expiration. You can also choose to have a refund of the remaining unused principal to a beneficiary if the annuitant dies prior to the principal being destributed.
You can set the annutiy up as a joint survivor benefit, meaning the payout will continue until the last of the two people dies. The joint survivor benefit can also be set up as less than a full benefit for the survivor to provide a larger initial benefit. eg: 50% of the annuitants benefit to the surviving spouse. Guarantees can also be provided on a joint survivor benefit.
In other words you can tailor the annuity (SPIA) to whatever makes you comfortable, realizing that the more guarantees, the more people covered, or the longer the guarantee, the less the income payout will be.
SPIAs can be a nice way to use a portion of your nest egg to assure a baseline of income, and allow your remaining nest egg to grow and perhaps replace the money you used for the income.
Now, another way to produce income, provide some upside potential, while keeping a level of protection, is to buy a kind of hybrid variable annuity. The one we sold at Principal worked basically like this: You put your money in a variable annuity and begin taking 5% out. The 5% is guaranteed, so even if the underlying investment drops, you still receive 5% or the original investment for life. If your investment increases, after 5 years you can lock into a new 5% payout based on the increased amount, again guaranteed for life. Every 5 years you would have the option to lock in a new amount provided the investment has increased. So you get both protection and market opportunity. There is, of course a cost for these features that are built into the annuity, but they are generably reasonable with a reputable company. Insurance companies are in the business of making small margins on large amounts of money using actuarial sciences, and the products are a sound bet for many people.