What is the difference between Annuity and Life Insurance? - ProProfs Discuss
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What is the difference between Annuity and Life Insurance?

Asked by G. GRAY, Last updated: Sep 16, 2020

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Larry Thornton

Larry Thornton

Curious about the World

Larry Thornton
Larry Thornton, Student, MBA, Los Angles

Answered Mar 30, 2020

An annuity is a form of insurance that gives an individual the right to receive a certain amount of money over a particular period of time, usually for the rest of one's life. People usually go for an annuity to plan for their future, especially when they retire or when they lose their jobs.

Life insurance is also a form of insurance on the life of a particular individual, which will be benefitted by people other than the insured person. After the death of the insured person, the insurance policy will begin to pay a certain amount of money to the beneficiaries as ordered by the insured person.

This money will be paid for a particular period of time, which means it is not something that goes forever. An annuity is enjoyed by the same person that invests in this type of insurance, but this usually stops after the death of such person. On the other hand, life insurance will not be enjoyed by the insurer but by dependants.

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