Annuities saw an impressive boom in 2023, with sales reaching a new all-time high of $385.4 billion — a 23% increase from the year before.
The growth was fueled by a massive $286.6 billion in fixed annuity sales, with a significant push from independent financial advisors and firms, according to LIMRA’s latest survey.
“Rising interest rates have made annuities very attractive to a larger group of investors who are served by independent advisors and broker dealers,” said Bryan Hodgens, head of LIMRA research, in a press release.
Two Years of Record Sales
For two years running, annuity sales have broken records, with more independent advisors getting in on the action. Higher interest rates have made annuities a more tempting option for investors, contributing to a 29% sales spike from these advisors compared to 2022, making up 41% of all sales in 2023.
The last three months of the year alone saw annuity sales soar to $115.7 billion, marking a 29% jump from the same period the previous year. Particularly noteworthy were fixed-rate deferred annuities, which set a record with $58.5 billion in sales in the fourth quarter, showcasing a 52% increase. This type of annuity ended the year with $164.9 billion in sales, a whopping 46% rise from the prior year.
The increase in fixed-rate deferred sales can be attributed to favorable interest rates and demographic trends, as more Americans over 60 look toward securing their retirement with safer investment options. Fixed indexed annuities also had a standout year, with sales reaching $95.9 billion, a 20% increase, largely driven by independent advisors and firms.
Income annuities benefited from the higher interest rates too, with single premium immediate annuity sales jumping 45% to $13.3 billion for the year, and deferred income annuity sales almost doubling to $4.2 billion.
Another highlight was the rise in registered index-linked annuities, overtaking traditional variable annuities for the first time, with annual sales reaching $47.4 billion, up 15%. On the other hand, traditional variable annuities saw a dip, with sales falling 17% to $51.4 billion for the year, despite a strong stock market.
