Life insurance is the protection against financial loss caused by the premature death of a loved one or business partner. Through this contract, a life insurance company pays the beneficiary a specific amount of money at the death of the insured person in exchange for the premium payments.

Solutions provided by life insurance include:

• To replace income a family would need to maintain their standard of living after the death of the primary wage earner
  
• To pay off any debts such as a mortgage or business loan
  
• To create a fund for a child’s college education
  
• To pay for final expenses such as funeral costs
  
• To pay for estate and inheritance taxes that may be levied by federal and state taxing authorities
  
• To create and preserve wealth for one’s family and for generations to follow

An annuity is a contract between you and an insurance company. In its simplest form, you pay money to an annuity issuer, and the issuer then pays the principal and earnings back to you or a named beneficiary.

The biggest advantage of an annuity is that your money grows tax deferred until you withdraw it. The tradeoff is that if you take your money out before age 59½, you'll usually have to pay a 10 percent early withdrawal penalty to the IRS. Annuities are generally used to provide income during retirement when, presumably, individuals are in a lower income tax bracket.

Annuities come in 3 basic forms: Fixed, variable, and index.