Summary –

"Deciding between life insurance and an annuity is a big task and many of us get can’t decide the right plan for them. You need to understand that both plans are made to serve different purposes and you should choose one accordingly. This article explains which type of insurance is better for retirement planning."

Ensuring a consistent source of income in retirement is one of the biggest headaches of the people these days. A big portion of the population is working in private organizations and aren’t entitled to receive any pension after their retirement. Such people are always worried about how their life after retirement will go. Annuity insurance plans have been brought into the existence with the same concept. These policies are designed to receive a monthly premium from the customer when they are working and payback through a fixed monthly income once they retire. The income is provided for file time and isn’t supposed to change due to inflation or any other factors. Let’s understand how annuities are different from a life insurance plans and which type of insurance plan is more beneficial to them.

Life Insurance

Life insurance provides a great option to protect yourself as well as your loved ones. Through a term-life plan, you can secure your loved ones for a certain period starting from 5 years to 30 years maximum. That means if you have bought an insurance plan and should something happen to you, your loved ones will receive a lump sum amount to take care of pending debts and other essential expenses. Depending upon the duration you need a cover for, you can choose a suitable insurance plan. However, you won’t receive any amount if you outlive the policy period. If you want to secure your retirement life as well, you can buy a term-life plan with receive assured return after retirement.

Whole life plans are meant to protect you for the life. That means, if you have bought a whole-life plan, you are covered throughout your life and your loved ones will receive an accumulated cash value when you expire. Usually, these policies don’t offer any income to live after retirement, you can talk to the insurance representatives and customize your plan to ensure a fixed income to take care of your essential expenses.


Coming to the annuities, these plans are specially designed to support senior citizen when they need it the most. These plans provide a consistent monthly income to spend their retirement life comfortably. The income is provided as long as the insured survives and doesn’t change throughout their life. One of the most common types is the deferred annuity, where the insured pays a fixed premium every monthly making them eligible to receive the income after their retirement. Under this, there are further two types: fixed and variable annuities. Fixed ones are where you a consistent income every month and the same wouldn’t be won’t be affected by of inflation, market performances, and other factors. While variable one allows you to invest a portion of your premiums into the market and receive a profit on the same. If you have a good knowledge of the market, you can utilize the same to predict the market performances and receive an increased income depending on the profit percentages.

Immediate annuity plans are a popular type of insurance that allows customers to invest a lump sum amount when retired or approaching retirement and receive a fixed monthly income immediately after that. By just filling an online form, you can receive top annuity insurance quotes from a large pool of providers. Another type is longevity insurance that can be bought while approaching and may last for long. These plans are great as a backup plan and prove very helpful when the fixed income declines or becomes insufficient due to the inflation.

Which One Is More Beneficial?

Though life insurance policies provide a sufficient protection for you and your family, they aren’t considered ideal for retirement planning. If you are planning your retirement you should look for a plan that can provide you a consistent income at a regular interval and that is where an annuity plan beats the life insurance plan. Buying a retirement annuity plan can help you receive a fixed income every month to take care of your essential expenses. Depending on your knowledge of the market, you can choose a variable insurance and receive profits as per the market performances.

Author's Bio: 

Anil Kumar is the owner of Optinsure and has been providing insurance-related support and services to help customers make their most crucial financial decisions. Owing to his vast knowledge and expertise in the industry, Anil has been successfully solving people’s queries about insurance options in different niches. His premium services for providing cheapest mortgage payment protection and life insurance quotes has enabled him to cater a huge clientele group and get appreciated among the same.