Life insurance vs a retirement annuity: Why get both?

Both life insurance and retirement annuities (RA) provide financial assurance benefitting you and your loved ones. However, they shouldn’t be considered interchangeable. Each plays a specific role in your financial plan and the security of your family’s financial future.

The difference between life insurance and an RA

Life insurance	Retirement annuity
Pays out a lump-sum upon death, disability or critical illness.	Allows you to invest regular and lump sum amounts that build up a fund value which pays out when you retire. This can then be used to provide an income in your retirement years.
Provides a lump sum or periodic payments to you and your beneficiaries / dependants in the event of one of the above claim events.	Aims to provide an income to you after you retire.
Get it to provide for your loved ones if you are not around or able to.	Get it to provide for yourself once in retirement.
The premiums aren’t tax deductible, but the amount received on your death won’t be subject to tax.	The premiums are tax deductible for saving, but the payments received are partially subject to tax.

Why do you need both?

Financial stability relies on the continued access to your income or maintaining an amount that meets your needs. When your needs are met by these types of products, there’s no reliance on your family for financial input, which means that they can focus on their financial growth.

Both provide a financial safety net but in different contexts: before and after death. The point of your RA is to create provision for having (enough) money to enjoy your remaining years after you retire. Your life insurance provides you and your family with money to cover their (and your) financial obligations in the event of death, disability ,or critical illness.

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_{Disclaimer: This article is solely intended for information. It does not constitute financial or investment advice or recommendation. Speak to a financial adviser or registered financial professional before making any financial decision(s).}