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HOW ARE ANNUITIES COMPARED WITH LIFE INSURANCE?
Annuities |
Life Insurance |
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| Protection | It is used for protection against loss income arising out of excessive longevity | Used against loss of income resulting from premature death |
| Pooling | People who die prematurely contribute to the income of the ones who live beyond their life expectancy. | People who live beyond their life expectancy compensate dependents of the ones who die prematurely. |
| Premiums | Premiums are based on different mortality tables | Premiums based on mortality tables |
| Discounts | Premiums (or deposits) discounted reflecting the interest earned by the insurer | Premiums are discounted reflecting the interest earned by the insurer |
