California Life Agent Practice Exam

The phase during which a life insurance policy's cash value begins to generate actual income for annuitization is known as the annuitization phase. In this phase, the cash value that has accumulated over the previous periods is converted into an income stream or annuity payment. This conversion transforms the previously accumulated cash value into regular payments to the annuitant, which can be structured for a specified time or for the lifetime of the annuitant.

In the context of life insurance and annuities, the annuitization phase marks the point where the policy not only serves as a financial asset but also starts to disburse funds as a regular income. This is a critical transition, as it signifies that the policyholder has reached a stage where they can utilize their investment to provide a steady income, reflecting the purpose of annuitization.

During the accumulation phase, while the cash value is growing, it has not yet been converted to income. The insurance phase typically involves the provision of death benefits without considerations of generating income from cash value. The termination phase usually refers to the end of the contract, which does not relate to generating income through annuitization. Therefore, the annuitization phase is the correct context for generating income from cash value