Life insurance and annuities are both offered by insurance companies, but they serve opposite purposes. Life insurance provides a financial payout (death benefit) to your beneficiaries when you die, protecting your loved ones' financial future. An annuity provides a stream of income to you, the policyholder, typically during retirement.

• Term Life Insurance: This type of policy provides coverage for a specific period of time, such as 10, 20, or 30 years. It is generally the most affordable option, and if you die within the term, your beneficiaries receive the death benefit. If you outlive the term, the policy expires with no payout.
• Permanent (Whole) Life Insurance: This type of policy provides lifetime coverage as long as premiums are paid. It also builds cash value over time, which you can borrow against or withdraw from while you are still alive.

The amount of life insurance you need depends on your financial situation and goals. Common methods for calculating this include:

• Income Replacement: A general rule of thumb is to have a policy worth 5 to 10 times your annual income.
• D.I.M.E. Method: This method considers your Debts, Income replacement for your family, Mortgage balance, and Education expenses for your children.

You should consider life insurance if you have anyone who is financially dependent on you, such as a spouse, children, or aging parents. It is also important if you have significant debt (like a mortgage) that you don't want to leave to a co-signer or if you are a business owner.

An annuity is a contract between you and an insurance company. In exchange for a lump sum or a series of payments (premiums), the insurance company agrees to make a series of regular payments back to you at a future date, providing a reliable income stream, usually for retirement.

The annuitization phase is the period when the annuity owner begins receiving regular income payments from their investment. This is also known as the payout phase and is the point at which the annuity is converted from an investment account into a stream of guaranteed income.

A beneficiary is the person or entity you designate to receive the death benefit from your life insurance policy when you pass away. It is crucial to name a beneficiary and keep this information up-to-date to ensure the payout goes to your intended recipient.

The death benefit is the amount of money paid out to your designated beneficiaries from your life insurance policy upon your death. This amount is typically paid as a tax-free, lump-sum payment.

Insurance companies consider several factors when determining your premium, including:

• Age: The younger you are when you purchase a policy, the lower your premiums will be.
• Health: Your current health status, medical history, and family health history are major factors.
• Lifestyle: Hobbies like skydiving or rock climbing, or habits like smoking, can increase your premium.
• Gender: Women, on average, have a longer life expectancy than men, which can result in lower premiums.

Yes, a permanent life insurance policy (such as whole life) accumulates a cash value over time. You can use this cash value as a living benefit by taking out a loan against it or making a withdrawal. Term life insurance, on the other hand, does not build cash value.