New products are being launched to ensure you don't outlive your savings.

The biggest financial risk facing most of us is not sharemarket risk but longevity risk.

That risk of outliving savings is fully covered by those lucky enough to have defined benefits pensions, who receive inflation-adjusted income for life.

But for retirees with allocated pensions, the longevity risk (and investment risk) is in their hands.

These retirees will be anxious to avoid a repeat of the disastrous consequences of being so exposed to market meltdowns again.

It's this need for security that the life insurers are hoping to satisfy with the launch of a new generation of annuities. They guarantee capital will be preserved or that a certain minimum level of income will be maintained, for life.

In the US, these new generation annuities, called variable annuities, are big business; they make up about 15 per cent of the pension market.

ING is the first to market with an income-guaranteed variable annuity in Australia. MoneyForLife guarantees a minimum level of income is paid for the life of the investor.

The income has the potential to grow in strong markets but will not decrease beyond the base amount in bad markets, giving investors peace of mind that they will not run out of savings.

Unlike most traditional annuities, investors in MoneyForLife have access to their capital, though this means the level of the guaranteed minimum income will be reduced. Investors can choose to invest in any one of three underlying investment portfolios.

AXA's North range of superannuation and retirement products comes with the option of a capital guarantee rather than an income guarantee.

The capital guarantee terms range over five, seven, 10, 15 and 20 years. AXA will add a lifetime capital guarantee in the first half of next year.

AXA guarantees the investor will receive back 100 per cent of the original capital plus any further contributions at the end of the term, less fees and costs – even if there is a capital loss.

But if markets have done well, the investor retains the capital growth. Up to 15 per cent of the capital can be withdrawn each year without affecting the guarantee. On the versions with terms of 10, 15 and 20 years, any capital growth is locked in annually, so the guarantee applies to the new, higher capital base.

The biggest annuity provider, Challenger, recently modernised its annuity-style offerings with its Challenger Guaranteed Income Fund (GIF). It is a managed fund that invests in annuities and derivatives provided by Challenger.

The fund pays a set monthly income. The fund is meant to be held to maturity (with a penalty for early withdrawal) and is available over terms of three, five and seven years, after which time the investor's capital is returned.

Challenger also has its older Guaranteed Income Plan with annuity terms of up to 30 years. These are closer to traditional annuities in that the investor can elect to draw down the capital over the term.

These annuity-style products operate fairly similarly in the event of the death of the policyholder. Generally, the money goes to either a "reversionary partner", the estate, or the nominated beneficiaries (providing they are "dependants" at the time of death).

The person selects the reversionary partner before the annuity and annuity-style product commences.

Along with Challenger, the Commonwealth Bank, through its life office CommInsure, remains the other big player in annuities and is believed to be the only one to still offer traditional lifetime annuities.

With annuities, the investor can choose to have the capital drawn down over the life-expectancy period or to have some of the capital left at the end of the life-expectancy term.

Investors should be aware that the greater the flexibility and options offered by a product, the higher the fees and costs.

Variable annuities are fairly complex products and investors would have to buy them through a financial adviser. That usually also means buying through an investment platform, which will also have administration fees.

Capital and income guarantees also drive up the costs for investors. The total fees on the ING product, for example, are about 3 per cent, though there is the potential for higher returns from these products than traditional annuities or fixed interest investments.

Next week's Money looks at what you can do to stretch your retirement income.