Both annuities and life insurance should be considered in your long-term financial plan. While both include death benefits, you buy life insurance in the event you die too soon and an annuity in case you live too long. Life insurance provides economic protection to your loved ones if you die before your financial obligations to them are met, Annuities guard against outliving your assets.
Comparing Deferred and Immediate Annuities
The two main types of annuities are deferred and immediate. The two main types of life insurance are term and whole life. The table below shows a quick comparison of these different options that are available to you in your planning.
Take a look at the table, but please feel free to contact us to discuss any questions you have. Let us help you plan for your loved ones to preserve your legacy and protect your family.
| Life Insurance | Annuities | |||
| Term life | Whole life | Deferred annuities | Immediate Annuities | |
| Reason to Buy | Provide income for dependents | Provide income for dependents or meet estate planning needs | To accumulate money in a tax-deferred product | To assure you don’t “outlive your income” |
| Pays When | You die | You die, borrow the cash value or surrender the policy | You make withdrawals | One period after you buy the annuity, stops paying when you die* |
| Payment | Single sum | Single sum | Single sum or income | Lifetime income |
| Typical Buyer’s Age | 25-50 | 30-60 | 40-65 | 55-80 |
| Tax-deferred Accumulation | No | Yes | Yes | Yes, but only in the early payout years |
| Death Benefit | Yes | Yes | Yes | *payments continue if the annuity has a guaranteed-period option that hasn’t expired at the annuitant’s death |
| Taxable Benefits? | No | No, unless a cash value withdrawal exceeds the sum of premiums | Yes, but only the part derived from investment income | Yes, but only the part derived from investment income |