The Differences Between Annuities And Life Insurance

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Annuities and life insurance are two financial products that serve different purposes and offer different types of protection and benefits. Here is a brief overview of the main differences between annuities and life insurance:

Annuities:

  • An annuity is a financial product that provides a steady stream of income over a specific period of time, either for a fixed term or for the remainder of the annuitant’s life.
  • Annuities can be either deferred or immediate. A deferred annuity allows the policyholder to make payments over a certain period of time and then start receiving income at a later date, while an immediate annuity begins paying out income right away.
  • Annuities are typically purchased by individuals who are nearing retirement or are already retired, and are looking for a secure source of income to supplement their retirement savings or to provide a guaranteed income for the rest of their lives.

Life insurance:

  • Life insurance is a contract between the policyholder and the insurer, in which the insurer agrees to pay a designated beneficiary a sum of money upon the death of the insured person.
  • Life insurance can be either term or permanent. Term life insurance provides coverage for a specific period of time, while permanent life insurance provides coverage for the entirety of the insured person’s life.
  • Life insurance is typically purchased by individuals who want to provide financial protection for their loved ones in the event of their unexpected death, to ensure that their family’s financial needs are met even if they are no longer around to provide for them.
The Differences Between Annuities And Life Insurance | GetMyAnnuity.com

In summary, annuities are designed to provide a steady stream of income for the policyholder, while life insurance is designed to provide financial protection for the policyholder’s loved ones in the event of the policyholder’s death. Both products can be useful tools for managing financial risk and planning for the future, but they serve different purposes and offer different types of protection and benefits.

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