Yes. Investors who have lost significant wealth in the stock market often turn to annuities during economic downturns. Often the investor is concerned he/she has made wrong decisions about individual stock or mutual funds. These investors want the added security of the professional money managers who administer the investments within the annuity. While others are concerned that leaving their money in the market will result in further losses.
Life insurance companies are responding to the concerns of variable investments by developing a number of new annuity products over the past several years. These new products enhance the life insurance company’s reputation of safety during turbulent economic times. This is a very good reason for why annuities are popular. For example, annuities with a cost of living adjustment (COLA) will ensure that the payouts increase each year in order to offset the effects of inflation. This is especially attractive to investors who fear a significant loss of purchasing power due to inflation. After all, next to outliving one’s retirement assets, inflation is the next greatest threat to retirement savings.
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Annuities have also become more popular because several insurance companies now offer options that allow all or a portion of the premium to be paid to a beneficiary. In the past, the part of the premium that was in the account at the time of the annuitant’s death became the property of the insurance company.
Annuity investors did not have the option of naming a beneficiary. A number of products now, however allow the annuitant to name a beneficiary who will receive the remaining amount.