Our life span is increasing. A good medical care system has meant an increase in the number of octogenarians and septuagenarians in the American society.

However, most senior citizens are seized by a new worry- they may outlive their savings and investments. Some of them are worried that the happiness of the sunset years of their life may be undone by a lack of financial independence. The recent events and developments in the world of finance and economy have done little to evoke confidence in the minds of the average American investor. Many people have witnessed their investments losing value in the stock markets. The other popular investment avenues, like money market funds and certificate of deposits have fallen out of favor due to a continuous drop in the interest rates.

Under such circumstances, the name that features prominently on the lips of investors turns out to be – Annuities. Annuity is a contract signed between an insurance company and the annuitant. The annuitant pays premium in a lump sum or at periodic intervals. After a period of few years [or in some cases, immediately upon making the contribution], the annuitant starts receiving income from the insurance company. Depending upon the period and the kind of annuity chosen, the annuitant can receive fixed or varying income for a lifetime or for a specific period.

But why should one invest in annuities? Aren’t stock markets a better option? Well, if one looks from the earnings point of view, then the stock markets will definitely score some brownie points. But for many people, including the elderly or those on the threshold of retirement, protection of savings is as important as earning interest. Many people find it reassuring to receive a daily check of small amount rather than receive a large sum rarely.

Unlike stocks, your investment in annuity carries a very low risk. If one chooses a financially strong company, then the risk to your savings is almost negligible. This is because there are strict laws and regulations governing insurance companies. For instance, if you purchase an annuity from qualified legal reserve life insurance company, then you can be assured that your savings are in a trusted hand. This is because the federal law requires that the insurance companies must at all times hold reserves that are equal to the withdrawal value (principal plus interest less early withdrawal fees, if any) of every annuitant’s policy. The state law also requires the maintenance of surplus capital as well as well as contributions to state guaranty funds to provide additional security.

So, if you are desire a protective cover over your savings, annuities might turn out to be the best option.