Annuitization is the process of taking your annuity and converting it into regular periodic payments. These payments can last a set period or until the death of the annuitant. Annuitizing your annuity is a permanent decision.

What Is Annuitization?

Annuitization is a method of guaranteeing yourself a regular and set income over a specific period of time. When you annuitize, you are essentially turning your annuity into set payments that you will receive — ensuring that you will never run out of money or not have income coming in.

If you choose to go this route, you have reached the point where you want to start receiving money instead of accumulating or putting money into an annuity.

Annuitization can be useful as a part of retirement planning since you can receive these payments when you are out of the workforce and have no other reliable or consistent source of income.

How Does Annuitization Work?

If you annuitize your annuity and convert it into set payments, it is important to remember that only the annuitant can receive them. Regardless of the original value of the annuity, the stream of payments will continue to the annuitant until their death.

You can also structure the payments you’ll receive in different ways during the annuitization process. For example, period certain annuitization allows you to opt for payments across a different timespan instead of them lasting until death.

If the annuitant dies before the period ends, then the payments will go to a beneficiary. Alternatively, if the set period ends and the annuitant is still alive, the payments continue.

The period certain option offers protection against the possibility of the annuitant dying not long after the annuity was annuitized, costing you or your family the majority of your money.

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When To Annuitize an Annuity

One of the main reasons to annuitize an annuity would be the guarantee yourself a set amount of income over a period of time, or even the rest of your life.

Annuitization ensures that, regardless of financial situations are hardships, you will always be guaranteed to have at least some money coming in each month.

Annuitization is often a permanent process, so it’s a big decision that you should make only when you have considered your present and future needs.

Once you have annuitized, you can’t go back and decide to withdraw the money that you put into the annuity. You will only receive it as payments over a set amount of time.

When you annuitize may differ depending on the type of annuity. According to the National Association of Insurance Commissioners, annuities can be either immediate or deferred. An immediate annuity would be annuitized right away where a deferred annuity could be years later.

Also, without period certain, leftover money from your annuity will not go to the annuitant’s family when they die. Even with period certain, the payments only continue for the predetermined amount of time regardless of how much money was left over.

Annuitization does ensure that, regardless of financial situations or hardships, you will always be guaranteed to have some money coming in each month.

Last Modified: September 20, 2021

2 Cited Research Articles

  1. National Association of Insurance Commissioners. (2020, September 30) Annuities. Retrieved from
  2. Colorado Department of Regulatory Agencies. (n.d.). Annuities. Retrieved from