Which element is associated with a Single Premium annuity?

A Single Premium annuity is characterized by the use of a lump-sum payment made at one time rather than through a series of regular contributions over time. This one-time payment serves as the principal amount that the annuity provider invests on behalf of the annuitant, typically growing over time with interest. Unlike regular contribution plans where investors pay into the annuity gradually, a Single Premium annuity simplifies the funding process, making it a useful option for individuals who may have received a one-time payout—such as an inheritance, bonus, or settlement—and want to secure a stream of income for the future.

The other elements listed do not align with the definition of a Single Premium annuity. Regular contributions indicates an arrangement typical of other types of annuities or savings plans, while interest calculated monthly is a feature that can vary depending on the specific terms of the annuity contract but isn’t exclusive to Single Premium annuities. Additionally, the investment in stocks and bonds generally pertains to variable annuities or other investment vehicles, but not specifically to the Single Premium structure, which focuses on the upfront payment rather than ongoing investments. Thus, the lump-sum payment is the defining characteristic, making it the correct response.