What distinguishes a single premium annuity from a flexible premium annuity?

A single premium annuity is characterized by being funded with one lump-sum payment made at the outset. This means that the investor pays a single upfront amount, which then funds the annuity and determines the future income or benefits it will provide. This structure contrasts with a flexible premium annuity, which allows for multiple payments to be made over time, providing more versatility based on the investor’s financial situation and preferences.

The option regarding withdrawals being allowed only once does not accurately convey the fundamental distinction between these two types of annuities. Additionally, while flexible premium annuities may offer guarantees related to income and may have varying investment requirements, the defining feature of a single premium annuity is its lump-sum nature. This definitive characteristic is what sets it apart from its flexible counterpart.