What is the purpose of the Annuity Period?

The purpose of the Annuity Period is to convert accumulated money into income payments. During this phase, the funds that have been saved or accumulated in an annuity are distributed to the annuitant in the form of regular income. This can be structured in various ways, such as providing payments for a fixed number of years, for the lifetime of the annuitant, or in accordance with other specified terms.

This period is crucial because it transforms the principal amount that has been invested or contributed into a reliable and predictable flow of income during retirement or another designated payout period. This setup is designed to offer financial security, enabling individuals to plan for essential expenses and maintain their standard of living after stopping work.

In contrast, other options focus on different aspects of annuities, such as accumulating funds, determining premiums, or beneficiary rights, which are not specifically tied to the function of the Annuity Period itself.