Annuitization is the conversion of an annuity into a series of future, periodic payments. An annuity has two stages. During the accumulation stage, all the money stays in the annuity contract, and the investor does not receive any money. At any point, the investor can decide to receive payments, which is known as the payout stage. Annuitization converts the annuity from the accumulation stage to the payout stage.
The annuity owner has a number of different options to set up payments. For example, they can choose the number of years they want to receive payments and the number of payments they want to receive throughout a year. They can even choose to receive all the money all at once as one lump sum. However, once an investor decides on annuitization, they generally cannot reverse the process to having an annuity in the accumulation stage. This would most likely require a brand new annuity contract.
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