Which type of annuity usually requires a single lump sum payment to start?

A Single Premium Annuity is designed to be initiated with a one-time lump sum payment. This type of annuity allows the investor to contribute a single amount, which then grows tax-deferred until withdrawal. The payment can lead to a series of income payments later, either immediately or at a future date, depending on the terms of the contract.

When evaluating different types of annuities, a flexible annuity allows multiple payments over time rather than a single payment, which differentiates it from the single premium option. Similarly, both variable and fixed deferred annuities may require either single or multiple premiums; however, the defining feature of a single premium annuity specifically revolves around that initial lump sum payment. Thus, it is the foundational characteristic that identifies this type of annuity.