- With LIS a member can purchase income over as many as 15 years. This allows you to dollar cost average into your income figure. An annuity on the other hand is a point-in-time purchase. This means that whatever the rate is on that exact day is the one you will receive. If you choose, you may also make a point-in-time purchase of the LIS, such as at retirement.
- With an annuity you give your money to the insurance company and they simply pay you a lifetime benefit. With the LIS you retain control of your account balance. It remains invested in a target date fund while paying you a monthly benefit.
- The monthly benefit for the annuity is fixed (unless a variable option with TIAA is selected). With the LIS, if the growth of your account balance exceeds the payout and expenses, your annual benefit may increase. Once your annual LIS benefit increases it cannot drop, even if your account balance decreases.
- The LIS may provide a death benefit of the account balance at the member’s passing. An annuity will not have a death benefit unless a member purchased a guarantee period which has not been exhausted.
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