What does the term "accumulation period" refer to in relation to annuities?

The term "accumulation period" in relation to annuities refers to the timeframe during which premiums are paid. During this period, the annuity holder makes contributions or premium payments, allowing the investment to grow over time. The funds accumulated can be invested and may generate earnings, which can significantly enhance the value of the annuity before the annuitization phase begins.

Understanding this phase is crucial because it lays the foundation for the future payouts that the contract will provide once the holder transitions into the annuitization period. The accumulated value at the end of this period will determine the series of payments that the annuity will subsequently provide for a set duration, often referred to as the annuitization stage.