Question

All of the following are true of an accumulation period of an annuity EXCEPT?

A) Payments are made by the contract holder.
B) It is the period of time which annuity payments accumulate interest.
C) It does not occur in a deferred annuity.
D) It is the period over which the annuitant makes payments into an annuity.

Answer 1

The accumulation period of an annuity does not occur in a deferred annuity. The correct answer is C.

Step-by-step explanation:

It does not occur in a deferred annuity.

An accumulation period is a period during which the annuity payments accumulate interest. It is the period over which the annuitant makes payments into an annuity, not payments made by the contract holder. A deferred annuity, on the other hand, has a period during which the contract holder makes payments, but no accumulation period since the annuity payments do not accumulate interest during that time.