Help protect your family’s future. Enter your zip code to get your free quote today!

Get Your Free Quote

Life Insurance vs. Annuity Death Benefits

The death benefit paid by a life insurance policy and a benefit from an annuity will affect your beneficiaries differently. Learn more about each type of plan and find out why buying a term life insurance policy may be the right fit for you.

Life Insurance Policy vs. Annuity Plan

Life insurance policies and annuities are two options that you can take into consideration in your financial planning. The essential difference between the two is:

  • You buy a life insurance policy to provide protection for your spouse, children, parents or businesses partners if you should die prematurely.
  • You buy an annuity to provide yourself with income if you outlive your savings and investments.

Life insurance death benefits are paid to your beneficiary(ies) when you die. This is based on an agreement made with a life insurance company and is contingent upon the regular premiums being paid.

Death Benefit Differences for Beneficiaries

An annuity policy is used primarily as a form of savings and income assurance for the person buying the policy. However, with life insurance policies, your named beneficiaries will receive your cash death benefit when you pass away. The death benefit will not be subject to income tax (unless there are any interest gains included).

When you pass away, the death benefit your loved ones receive will be the face value of the policy. This means that if you pay $500 premiums for a $100,000 term life insurance policy, your death benefit will be $100,000. If you had invested $500 in an annuity, your death benefit would only be $500 plus any interest that had accumulated.

Term Life Insurance and Whole Life Plans

The two primary types of life insurance policies are term life insurance and whole life insurance. Term life insurance provides coverage for a set period of time such as five, 10 or 30 years. Whole life insurance plans provide coverage for the rest of your life as long as premiums are paid.

If you want to help protect the financial stability of your loved ones who depend on your income and contributions for their well-being, you may want to consider ife insurance options as opposed to an annuity. Connect with a licensed life insurance agent to learn more about life insurance death benefits.Speak with a licensed agent at 800-966-7169 today.

Help protect your family’s future. Enter your zip code to get your free quote today!

Get Your Free Quote

Related Information

Types of Life Insurance | Death Benefit Differences

Choosing the right insurance policy for you and your loved ones starts with understanding how the death benefit of each type works.

Read More

Benefits of Whole Life Insurance

Whole life insurance stays in effect for your entire life and also accumulates cash value over time.

Read More

Understanding Term and Whole Life Insurance

Term and whole life insurance are two of the most popular kinds of life insurance policies. Read on to learn how they work.

Read More

Term Vs. Whole Life Insurance

Whole life insurance is permanent, meaning it remains in effect for as long as you pay the premiums. Term life insurance expires, but is more affordable.

Read More

Term and Permanent Life Insurance Policy Benefits

Gain a better understanding of life insurance benefits by reading through this comprehensive guide.

Read More

Group Term Life Insurance | Definition and Benefits

Group term life insurance is offered by an organization to its employees as a benefit. The benefits help protect your loved ones financially if you pass away.

Read More

Everything You Need to Know About Life Insurance Payouts

If you have a life insurance policy, a payout of the death benefit is preceded by a claim providing a death certificate.

Read More

Which is Better: Term Life Insurance or Permanent Life Insurance?

What’s the difference between term and permanent life insurance, and which is right for you? Read on to find out.

Read More

What Is Term Life Insurance Able to Cover?

Term life insurance pays a death benefit to the policy beneficiary if the policyholder dies within the term of the policy.

Read More