What does a Single Premium Deferred Annuity (SPDA) involve?

A Single Premium Deferred Annuity (SPDA) involves making a single lump sum investment that will grow over time before the investor begins to make withdrawals. This type of annuity is designed for long-term savings and is distinct from other annuities that may require regular premium payments or immediate payouts.

In an SPDA, the funds are typically invested for a period during which they accumulate interest or investment returns. The "deferred" aspect means that the investor does not receive payments immediately; instead, they allow their funds to grow for a specified period before they start taking withdrawals or begin receiving regular income payments. This is advantageous for those looking to save for retirement or another future financial goal, as it allows the investment to potentially increase in value before distribution begins.

The other options incorrectly describe the nature of this product. Regular premium payments and immediate payouts suggest a different type of annuity, while mentions of market performance relate more closely to variable annuities rather than the fixed growth usually associated with SPDA products.