Annuity vs. Life Insurance: What’s the Difference?

Since my financial planning career began over 20 years ago (ed. did I really admit to that?!), life insurance has been a regular topic of conversation with clients. Annuities? Not so much and understandably so since annuity payouts are directly related to interest rates. With the recent increase in interest rates, it’s time to revisit the merits of annuities.

This article provides a very good primer on what life insurance and annuities are, how they work, when to best consider them and what objectives they can address. However, keep in mind that this article is written with an American slant; meaning, that the tax consequences in Canada might be a little bit different.

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While both are insurance products, how they pay policyholders differs.

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