Difference Between an Annuity & a Life Insurance Policy
Life insurance and annuities are two very different ways to invest for the future. Annuities are designed to offer living benefits. Some types of life insurance offer living benefits, but the basic concept of life insurance is to provide death benefits.
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Insurance Living Benefits
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Cash value accumulations and policy loans are living benefits provided by a whole life insurance policy.
Retirement Income
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Annuities provide income during the life of the beneficiary. They are often established for the purpose of providing retirement income.
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Create an Estate
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Life insurance is a way to create an estate by having the death benefits to leave to a loved one.
Liquidation of Estate
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Annuities are considered a liquidation of an estate because you are using money that would otherwise become a part of your estate to fund the annuity.
Term Contracts
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Annuities and life insurance may both be purchased as term contracts. A term contract offers benefits for a specified number of years, usually five, 10 or 20 years. A term annuity only pays the beneficiary for a certain number of years, and term life insurance offers insurance coverage for a certain number of years, which is determined at the time of purchase.
Term Life Insurance
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There are no cash value accumulations or policy loans offered with term life insurance.
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