SPDA is characterized by which of the following?

SPDA is characterized by which of the following?

• A. It is funded by a single premium with withdrawals starting after at least one year.
• B. It requires monthly premiums for the first five years.
• C. Withdrawals begin immediately.
• D. It cannot be surrendered.

Answer: (A)

SPDA is a single premium, deferred annuity. You make one upfront payment, and the growth is tax-deferred until withdrawals begin after a deferral period, typically at least one year. This deferred start distinguishes it from an immediate annuity, where payouts start right away. Also, SPDA can be surrendered (often with surrender charges), so the statement that it cannot be surrendered isn’t accurate. The other options describe different types of annuities: ongoing premiums like a flexible-premium plan, or immediate payouts, which don’t fit the single-premium, deferral nature of an SPDA.

SPDA is a single premium, deferred annuity. You make one upfront payment, and the growth is tax-deferred until withdrawals begin after a deferral period, typically at least one year. This deferred start distinguishes it from an immediate annuity, where payouts start right away. Also, SPDA can be surrendered (often with surrender charges), so the statement that it cannot be surrendered isn’t accurate. The other options describe different types of annuities: ongoing premiums like a flexible-premium plan, or immediate payouts, which don’t fit the single-premium, deferral nature of an SPDA.