Annuity sales continue to boom as concerns over the economy drive consumers to investment products that offer protection, the industry trade association LIMRA reports in a new trends analysis.
After 2024 saw the third year of record-high annuity sales, Q1 2025 total annuity sales were $105.4 billion — slightly lower (-1%) than the record set in Q1 2024, but rebounding 3% from Q4 2024. This is the sixth consecutive quarter of sales over $100 billion. A slight reduction in interest rates and a surging equity market resulted in double-digit growth in traditional VA and RILA product sales but declines in fixed annuity products, LIMRA said.
“As market volatility increased throughout the quarter, our research showed consumers’ sentiment about the economy plunged,” said Bryan Hodgens, senior vice president and head of LIMRA research. “By the end of the quarter, 6 in 10 consumers said they were very concerned about the economy — a 14-point difference from January. As a result, consumers sought out investment protection and safety. Our data show March marked the second highest monthly sales in history and fixed-rate deferred product sales having the highest monthly results in over a
LIMRA reported that there are “significant tailwinds” favoring the annuity market despite an uncertain the economic outlook for 2025. The organization predicted that total annuity sales will exceed $400 billion this year.
Favorable Demographics and Growing Need
U.S. demographic trends favor the annuities industry, LIMRA said. More than 4 million people will turn 65 each year through 2029, and most will retire without a pension, according to the organization. Just half of pre-retirees said last year that they had enough guaranteed lifetime income sources to cover basic living expenses, down from 58% in 2017.
LIMRA said its research shows “historically high” interest in converting a portion of assets to an annuity, with more than 50% of pre-retirees and retirees saying they would be interested.
Over the past 10 years two products — registered index-linked annuities (RILAs) and fixed indexed annuities (FIAs) — have become significant drivers of annuity sales growth. The two have grown from 23% of the $242 billion in total annuity sales in 2015 to 44% of the $434.1 billion in total sales in 2024.
RILA sales increased from $3.7 billion in 2015 to $65.4 billion in 2024 as the number carriers offering these products rose from four to 21. RILAs give investors the ability to mitigate equity market downturns and allow companies greater flexibility to hedge against risk as market conditions change, according to LIMRA.
FIA sales have surged as annuity carriers introduced custom indices, offered more flexible crediting methods, and improved and expanded income riders. Since 2015, FIA sales have increased more than 137% to $126.9 billion in 2024.
“With these indexed products, carriers have broadened their solutions across the risk spectrum to address investors’ individual needs,” Hodgens said. “For those investors most interested principal protection, fixed-rate deferred annuities offer safety and guaranteed return. As investors’ appetite for greater upside potential with limited market risk has grown, FIAs and RILAs are increasingly available, and our sales data suggest it is resonating with the market.”
Products Aim to Expand Distribution
Product innovation also plays a role to expand annuity distribution, with the industry working to develop products that attract more registered investment advisor (RIA) interest, LIMRA reports.
“There is greater interest in balancing commission-based products and fee-based products,” said Keith Golembiewski, assistant vice president and director of LIMRA Annuity Research. “Today, just half of RIAs report selling annuities to their clients — the expansion of fee-based products may increase annuity sales through the RIA channel. As carriers incorporate advanced technology, they are able to sell both products side by side. Our research shows fee-based VAs and FIAs have doubled since 2020 to $7.7 billion in 2024.”
The contingent deferred annuity (CDA) market, while not entirely new, is designed to attract more RIAs. The product wraps an annuity on an advisory account, which allows an investor to create guaranteed income without relinquishing the assets. Because RIAs are often compensated with a percentage of assets under management, LIMRA said this could be an attractive new way for them to create lifetime income for their clients.
“Ultimately, there is $17 trillion in IRA assets on the table,” LIMRA said in the release. “The increased availability of capital through private equity investment and reinsurance, coupled with advanced technologies and product innovation, opens tremendous opportunity for the annuity industry.:
