What distinguishes a single premium payment option from a flexible premium payment option in a deferred annuity?

The distinction between a single premium payment option and a flexible premium payment option in a deferred annuity primarily centers on the number of payments that are made to purchase the annuity.

A single premium payment option requires a one-time lump sum payment at the time of purchase. This means the annuitant invests a single amount, which will then grow on a tax-deferred basis until the annuitant decides to withdraw funds or convert the contract into an income annuity.

In contrast, a flexible premium payment option allows the annuitant to make multiple payments over time, contributing varying amounts at different intervals. This flexibility can cater to the individual's financial circumstances, allowing them to invest more or less based on their financial situation or goals.

This key difference in the payment structure directly impacts the funding and accumulation of the annuity, influencing both its growth and the annuitant's ability to manage cash flow effectively throughout the investment period.