Life insurance is a common financial product, but annuities aren’t as popular. If you’re wondering what the difference between annuities and life insurance is, here’s what you need to know.
What Is An Annuity?
Annuities are financial products that provide the annuitant, or policyholder, with a guaranteed income stream later in life. You can invest in or purchase an annuity with monthly premiums or lump-sum payments. Once you own an annuity, the financial company that sold it is obligated to provide you with an income stream in the future. This income stream may last for a set period of time or for the rest of your life. This makes annuities a great option for retirement.
What Is Life Insurance?
Life insurance policies guarantee a death benefit payment for the policyholder’s beneficiaries if the insured person dies. There are two types of life insurance, term life, and permanent life. Term life insurance lasts for a set period of time, but permanent life insurance lasts for the insured’s entire lifetime. Though, if you stop making premium payments, coverage ends soon after.
Differences Between Annuities and Life Insurance
Annuities and life insurance are similar products, except annuities are designed to provide an income during one’s life. Life insurance, on the other hand, is designed to provide your loved ones with additional income after you or the insured person dies. This makes the two products very different and the use cases aren’t very similar either. However, some annuities do allow you to pass the invested money to a loved one if you die.
Do You Need An Annuity or Life Insurance?
If you are planning for retirement, an annuity makes more sense. Though, that doesn’t mean life insurance isn’t important. Because these two products fulfill different needs, chances are you may need both. Life insurance can replace your income when you die, while an annuity can sustain you while you’re alive. By combining the two, you can take care of two vital needs at once.
Find An Annuity or Life Insurance
If you aren’t sure about whether you need an annuity, life insurance, or both, contact Carolina Senior Benefits. We’ll guide you through the decision-making process and ensure that you know the upsides and downsides of any plan we offer you.
To contact one of our representatives, use the contact form or call 704-765-4689.