7.3.1 Funding Method
An annuity must begin with a sum of money (the principal), which can either be supplied through the single payment method or through the periodic payment method. For instance, the funds from surrendering a life insurance policy can be used to fully fund an annuity in one lump sum payment. If the periodic payment method is used instead of a lump sum payment, the payment amounts can either be fixed or flexible.
Types of Annuities
