Life annuity Phases of an annuity

There are two possible phases for an annuity:

The accumulation phase in which the customer deposits and accumulates money into an account, and ; The distribution phase in which the insurance company makes income payments until the death of the annuitants named in the contract. It is possible to structure an annuity contract so that it has only the distribution phase; such a contract is called an immediate annuity.

Annuity contracts with a deferral phase—deferred annuities—are essentially two-phase annuities, but only having growth of capital by investment in the accumulation phase (now the deferral phase), with no customer deposits.

The phases of an annuity can be combined in the fusion of a retirement savings and retirement payment plan: the annuitant makes regular contributions to the annuity until a certain date and then receives regular payments from it until death. Sometimes there is a life insurance component added so that if the annuitant dies before annuity payments begin, a beneficiary gets either a lump sum or annuity payments.