What's the difference between an annuity and a permanent life insurance policy?

While both an annuity and a permanent life insurance policy offer the potential for an increase in the investment, an annuity does not always pay a death benefit to a beneficiary. Annuities that do have a death benefit do not pay it tax-free. Generally, annuities are designed to provide retirement income while life insurance is designed to offset a family's exposure to loss income.