Single Premium Deferred Annuity

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Single Premium Deferred Annuity

An annuity purchased with a lump sum payment by the annuitant, who does not begin to receive payments until some future date. Like all deferred annuities, an SPDA has two phases, a savings phase and an income phase. The savings phase involves the annuity taking the lump sum payment and investing it on behalf of the annuitant. In the income phase, the annuitant receives payments. It is important to note that an SPDA, like all deferred annuities, is not taxed until the income phase begins. It also pays a death benefit to the survivor(s) of the annuitant. See also: IRA, 401(k).
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References in periodicals archive ?
Baldwin-United insurers began offering single premium deferred annuities (SPDAS) in 1979, and soon they became big sellers of one of the fastest-growing products in the insurance industry.
This figure is based on a life insurance company issuing single premium deferred annuities (hereafter SPDAs).
Most important, single-premium deferred annuities (SPDAS) turned out to be a tax-favored savings and investment vehicle gaining progressive acceptance during the 1980s.
Todd, Richard M., and Neil Wallace, 1992, SPDAs and GICs: Like Money in the Bank, Federal Reserve Bank of Minneapolis Quarterly Review, 16(3 ): 2-17.