What defines the accumulation period in a deferred annuity?

The accumulation period in a deferred annuity is defined as the phase where investment growth occurs. During this time, the annuity owner makes contributions or premiums, and those investments have the potential to grow based on the performance of the underlying investment vehicles chosen. This growth can take various forms, including interest, dividends, or capital appreciation, depending on the type of annuity.

This period is distinct from the payout phase, which occurs after the accumulation period concludes. While payments do not begin during the accumulation phase, it is crucial to understand that this is when the funds grow, allowing for a potentially larger sum to be available once the individual enters the payout stage.

In contrast, the time period before payments begin refers to the accumulation phase but doesn't capture the essence of investment growth. The duration of the contract is more about the overall timeline and may not specifically focus on how the funds are growing during that time. Finally, the period of guaranteed payouts pertains to the phase when the annuity starts disbursing funds, which is not part of the accumulation period.