1. 37376 POINTS
    David G. Pipes, CLU®, RICP®
    Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
    A single premium annuity is a life insurance product. It is a contract written and guaranteed by a life insurance company. It operates exactly opposite from a life insurance policy. The contract promises to make monthly deposits for the rest of the life of the annuitant in exchange for a single lump sum. This is accomplished by studying life expectancy. The company knows that some will live for a shorter period than life expectancy, while others will live longer. By balancing these factors and including interest earned on the lump sum the company can write a contract and include promises that it can keep.
    Answered on September 10, 2014
  2. 2777 POINTS
    Terry A. McCarthy, CLU, ChFC
    President, Insurance Associates Agency Inc., West Chester, OH
    The answer lies within your question. Annuities are, by their construction, methods of accumulating assets, and methods of distributing assets. It is that simple. A single premium annuity is where no stream of regular payments is contemplated. In other words, you create your accumulation in the annuity with a single payment.

    The "deferred" part explains that the annuity will have a payout at a later time. So, a single premium deferred annuity is an annuity that expects only one large lump payment and that time will pass before the funds will be distributed. The time that passes could be a year or fifty but the payout will be later.
    Answered on February 1, 2016
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