What does the term "annuitization" refer to?

The term "annuitization" specifically refers to the process of converting an annuity's accumulation phase, where contributions have been made and investment growth occurs, into the payout phase, where the annuity begins to distribute funds to the annuitant. During annuitization, the accumulated funds are typically transformed into a series of regular payments that can be received over a specific period of time or for the remainder of the annuitant's life. This is a crucial feature of annuities, as it marks the transition from savings or investment growth to income generation, which is one of the primary purposes of purchasing an annuity. Through this process, individuals can secure a more predictable income stream during retirement or other financial needs, underscoring the significance of annuitization in the overall lifecycle of an annuity product.