What characterizes a single premium annuity?

A single premium annuity is characterized by a one-time payment made by the annuitant to start the annuity contract. This payment is typically a lump sum that the insurer then invests to provide income to the annuitant at a later date. The simplicity of requiring only a single payment distinguishes this type of annuity from others, such as those requiring multiple payments made regularly over time.

The other answer choices describe characteristics of different types of annuities or payment structures. For instance, regular payments made over time apply to installment premium annuities, where the annuitant makes periodic contributions. Payments based on market performance pertain to variable annuities, which can fluctuate based on the performance of the underlying investments. Flexible premium payments refer to contracts that allow the annuitant to make payments at varying intervals and amounts, rather than a single upfront payment. Therefore, the defining feature of a single premium annuity is indeed the one-time payment that initiates the contract.