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Stock market woes raise interest in annuities

09/21/11

Although current annuities have low payouts and interest rates, many investors are considering the guaranteed plans in what has been an extremely volatile time for the stock market, according to a Reuters report.

The Insured Retirement Institute notes that 2011 second quarter sales of annuities are up 10 percent from 2010, to $60.4 billion, and include sales of both fixed and variable annuities. While annuities are often characterized by high fees and complex language, the volatility of the stock market portrays them as a good option because their guarantees, while in more stable economic situations may seem weak, are now attractive.

"Retirees and those near retirement are searching for ways to safeguard their nest eggs and increase their payouts," a New York Life Insurance Company spokesperson told the source. "This is fueling a growing hunger for guaranteed income."

In such a difficult market, guarantees become increasingly valued. The source cited a recent survey by SunAmerica Financial that found 65 percent of investors want to put funds into programs that are guaranteed not to lose money.

According to the Insurance Information Institute, individual fixed annuity sales in the U.S. dropped by 27 percent between 2009 and 2010, making recent gains all the more surprising, an indication of the current fickleness of the stock market.

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