A single premium annuity is funded with one lump-sum payment at issue, with no additional deposits permitted afterward. This is the most common funding structure for MYGAs, FIAs, and SPIAs. Once the contract is issued, the entire premium is locked in for the duration of the contract term.
When Single Premium Makes Sense
Single premium funding is the right structure when you have a defined sum to deploy – rollover from an old IRA or 401(k), proceeds from a property sale, an inheritance, or maturing CD or bond proceeds. The simplicity is the appeal: one transaction, one rate lock, one term. Most clients buying fixed annuities use single premium for these reasons.
Single Premium vs Flexible Premium
The alternative is a flexible premium annuity, which allows ongoing contributions over time. Flexible premium structures are more common in deferred-income products like DIAs and traditional cash-value life insurance. For most retirement-stage buyers, single premium is simpler and offers better rate locks because the carrier can deploy the full deposit immediately into matched bonds.
