What type of annuity is purchased with a single lump-sum payment?

A single premium annuity is specifically designed for individuals who wish to make a one-time lump-sum payment to purchase the annuity. This type of annuity provides immediate benefits, allowing the investor to receive periodic payments or income based on the terms of the contract, while avoiding the need for ongoing premium payments.

In contrast, a periodic premium annuity requires ongoing payments made at regular intervals, such as monthly or annually. A flexible premium annuity allows for varying contributions, giving the policyholder the ability to adjust payments based on their financial situation. A deferred annuity refers to an annuity that does not start payouts until a specified future date, often involving growth of the investment prior to the payout phase. The nature of a single premium annuity is what distinctly categorizes it as one that is funded through a singular lump-sum payment instead of multiple contributions.