Annuities✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
In an annuity contract, the period during which premium payments are made and funds accumulate is called the:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
An annuity has two phases: the accumulation phase, during which the owner pays premiums (single or periodic) and the account grows tax-deferred, and the annuitization (distribution) phase, when the insurer makes income payments to the annuitant. Money grows tax-deferred during accumulation and is taxed under the exclusion ratio when distributed.
Why the other options are wrong
- B) The annuitization phase is the payout phase, after accumulation ends.
- C) The free-look period is the short statutory right to cancel a policy after delivery — not a contract phase.
- D) The elimination period is a disability insurance waiting period, unrelated to annuities.
Memory hook
Accumulation = the savings phase (money in). Annuitization = the income phase (money out). Build the pile, then convert it to a paycheck.