Life Insurance vs. Annuities: What You Should Know.
What’s the difference between life insurance and annuities? It’s a common question. And if it’s one you’re asking, it probably means you’re thinking about what it takes to create a secure financial future for you and the people you love. And that’s a very good thing.
The bottom line: life insurance provides your loved ones with the financial peace of mind they deserve when you die. Annuities provide a tax-deferred way to grow money and provide an income stream for later in life.
Both should be considered as part of a long-term financial plan. And both share some similarities. But the overall purpose of each is very different. Let’s take a quick look.
Life Insurance Protects Their Future
Life insurance is an affordable way to protect and provide for the people you love once you’ve passed away. The death benefit your family receives can replace your income and help them meet important financial needs like funeral costs, daily living expenses, mortgage payments and college funding. And there’s no tax on the death benefit if it’s paid to your beneficiaries in a lump sum.
Want to find the right life insurance for you and your loved ones? American Family has the customized options you're looking for.
Annuities Prepare You for the Future
Think of an annuity as a tool that could help you ensure a regular income for the rest of your life. Here's how they work: you purchase the annuity (through a lump sum or a series of payments) and then it makes payments to you immediately or on a future date. The income you receive from an annuity can be doled out monthly, quarterly, annually or even in a lump sum payment.
So, now you have a high-level view of two very important, and very different, ways to protect the future — yours and theirs. If you’d like to talk about these or other ways to protect the people and things that matter most to you, your American Family agent is ready to help.
Life insurance offered by American Family Life Insurance Company. Annuity products offered through B&A Insurance Solutions.
Related Topics: Understanding Insurance