Annuities have two key phases in their life spans. These include the accumulation phase and the annuitization phase.
The accumulation phase:
The accumulation phase is the period when the annuity holder is making deposits into the annuity. This may encompass a long period of time where many contributions are being made, or conversely, it may be just one large lump sum contribution.
The annuitization phase:
The annuitization phase is when the annuity starts to make income payments. This occurs when the money that has been deposited into the annuity is essentially converted over from savings into an ongoing income stream.