Life Insurance Basics
What is Life Insurance?
Life insurance is an agreement between you (the insured) and an insurance company. Under the terms of a life insurance contract, the insurance company promises to pay a certain sum to someone (a beneficiary) when you die, in exchange for your premium payments.
What is an Annuity?
An annuity is a contract between you and an insurance company. Simply stated, you pay money to an annuity issuer, and the issuer pays out the principal and earnings back to you or to a named beneficiary. Life insurance companies first developed annuities to provide income to individuals during their retirement years.