Annuities✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
A single premium deferred annuity (SPDA) is characterized by:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A single premium deferred annuity is purchased with one lump-sum premium, and the accumulation phase runs for a period before annuitization begins, which is why it is called deferred. During that period the cash value grows on a tax-deferred basis. This contrasts with an immediate annuity, which begins payments within a short time, and with a flexible premium annuity, which accepts multiple payments over time.
Why the other options are wrong
- B) Multiple flexible premiums describe a flexible premium deferred annuity, not a single premium product.
- C) Income beginning almost immediately describes an immediate annuity, not a deferred one.
- D) Premiums for nonqualified annuities are paid with after-tax dollars and are never tax-deductible.
Memory hook
SPDA = one big deposit today, income stream later: pay once, defer, then collect.