How can an annuity be funded?

Annuities can indeed be funded through a variety of methods, which is why the correct choice pertains to both single payment and periodic payments.

A single payment allows an individual to make a one-time investment, establishing the annuity with a large amount of capital upfront. This is particularly advantageous for individuals who may come into a significant sum of money at once, such as from the sale of a property or an inheritance.

Periodic payments, on the other hand, enable individuals to contribute smaller amounts over time, either monthly, quarterly, or annually. This method of funding makes annuities accessible to a wider range of individuals, as it allows them to budget their investments without needing to commit a large sum all at once.

This flexibility in funding sources is essential for addressing the diverse financial situations and strategies of different individuals. Thus, both funding methods are acceptable and commonly used in establishing annuities, confirming that the answer accurately reflects how funding can occur in practice.