Annuity |
Life Insurance |
Designed to provide a steady stream of income to the policyholder during retirement or after a lump sum payment |
Designed to provide financial protection to the policyholder's beneficiaries in the event of the policyholder's death |
Premiums are generally higher than the premiums for Life insurance premiums because annuities provide an income stream |
Premiums for life insurance are generally lower than the premiums for annuities |
Annuities are purely investment products |
Life insurance policies may include an investment component, such as a cash value |
Annuities provide a stream of income payments over a specified period of time |
Death benefit from a life insurance policy is paid out in a lump sum |
Annuities are typically purchased by individuals who are approaching retirement age |
Life insurance policies can be purchased at any age |
Annuities can be considered a higher-risk investment because they are tied to the performance of the financial markets |
Life insurance is considered a low-risk investment because it provides a death benefit |
Annuity income is taxed as ordinary income |
Life insurance death benefits are generally tax-free |
Annuities generally have limited liquidity options |
Life insurance policies can be surrendered for a cash value |