Chelsey Tucker graduated with a Bachelor of History degree from Metropolitan State University in 2019. She now writes about insurance with her specialty being life insurance and has been quoted on Help Smart Phone and MEL Magazine.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Mar 19, 2020

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What is an annuity liquidation phase?

An annuity liquidation phase is the period of time when the holder of the annuity is paying regular payments to the owner of the annuity. This is also known as the accumulation period.

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The following article will provide additional information about annuities and the types of annuities available.

What is an annuity?

Before getting into the specifics of an annuity, you should know what an annuity is. An annuity is a guaranteed amount of money paid out by an insurance company or organization to an individual who has paid into the fund. Payment may be given monthly or annually. Annuities are available in many different situations but all of them operate generally in the same three steps:

  • the contributor pays in
  • the holder invests
  • the holder pays out

Some annuities are set up by employers as retirement plans. Throughout the years, employees pay into the annuity then the holder of the annuity invests the funds of the contributors. If invested wisely, the fund grows allowing more money to be paid out in retirement funds. If you don’t have access to an annuity through an employer, check with organizations that you are a member of. Many different types of organizations offer annuity options as well. Or, you can find an annuity fund on your own.

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Another way to get an annuity is to be given or awarded a large sum of money. This may be done through a trust fund, a will, winning the money, or cashing out another type of fund like a 401k. When your start an annuity with a large lump sum, you have more options as to when and how you can access the money.

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What Are the 3 Main Types of Annuities?

There are 3 main types of annuities.

  • The first type and one of the most popular is a SPIA annuity. SPIA stands for Single Payment Immediate Annuity. This type of annuity is paid out one time instead of receiving regular monthly or yearly payments. SPIAs are very specialized and are recommended for specific situations such as retirement roll-overs. If you are thinking about going with this option, you should consult a financial planner or annuity specialist first to see if your specific circumstances apply.
  • The second type of annuity is an immediate annuity. This type of annuity pays out regular payments to the contributor starting one month from the initial deposit. Obviously, this is for people who are able to contribute a significant amount to get the annuity started. If you are able to start your annuity with just a small amount of money, an immediate annuity is not the choice for you as your monthly payments would not be significant enough.
  • The third type of annuity is a deferred annuity. A deferred annuity is what most people choose when they are planning on using their annuity for retirement. A deferred annuity has a period of time when the contributor is paying into the annuity and a period of time when the holder of the annuity is paying out to the contributor or liquidating the fund. If the first period is long, the second period will be more profitable. If the first period is short, the second period will be less profitable.

If the holder of the annuity is making a mixture of good investments and some risky investments, but mostly secure investments, then the payout to the contributor should be much higher than the amount that was paid in. That is why annuities are good both for the contributor and for the holder. You should keep close tabs on how your money is being invested as you are making contributions.

What is the best way to find an annuity plan?

The best way to find the right annuity plan for you or your family is to shop around and compare what different annuity holders have to offer. If you are getting an annuity through your employer, you may not have this option. However, if you are getting the annuity on your own, it is important to see what many different holders have to offer so you know that your money will be invested the way you want it to be.

You can use the online comparison tool to compare what different holders offer to their contributors. This device will help you see which companies have exactly what you are looking for. Enter your zip code to compare annuity quotes now!