Final answer:
Another name for a lump sum funded annuity is Single Premium Immediate Annuity (SPIA).
Step-by-step explanation:
A lump sum funded annuity is a type of annuity that is purchased with a single payment, or a lump sum of money, in order to start receiving regular payments immediately. This annuity option is often chosen by individuals who have received a large sum of money, such as the proceeds from the sale of a property or an inheritance, and want to convert it into a guaranteed income stream for a fixed period of time or for the rest of their life.
For example, let's say John inherited $500,000 from his grandfather. Instead of investing the entire amount or using it all at once, he decides to purchase a lump sum funded annuity, also known as SPIA, from an insurance company. With this annuity, John will receive regular payments from the insurance company for the rest of his life or for a fixed number of years, depending on the terms of the annuity contract.