Annuities Are Booming—But Are We Selling Them Smarter?
$434.1 billion.
That’s the number that’s making headlines, courtesy of LIMRA’s latest report on 2024 annuity sales—a record-shattering 13% year-over-year jump. Over half of annuity carriers posted double-digit growth. Products like Fixed Indexed Annuities (FIAs) and Registered Index-Linked Annuities (RILAs) are flying off the shelves. Even traditional VAs had a resurgence.
But here’s the question too few professionals are asking:
Are we celebrating smart growth—or just fast growth?
Because if this boom is built on outdated sales models, product complexity, or misaligned consumer expectations, we could be heading for a credibility crisis.
The Story Behind the Surge
Yes, the sales data is impressive:
FIAs: $126.9B in 2024 sales, up 32% and the third straight record year.
RILAs: $65.6B, up 38%, overtaking traditional variable annuities.
Traditional VAs: $60.9B, bouncing back after three years of declines.
SPIAs and DIAs: Both set annual records.
FRD Annuities: Down 7% overall—after a dramatic Q4 slump due to falling interest rates.
This isn’t just a rate-driven rush. LIMRA points to growing consumer demand for two things: protected growth and guaranteed income. After two years of market whiplash and inflation paranoia, retirees want pension-like stability with at least some upside. FIAs and RILAs deliver exactly that—at least on the surface.
For Advisors: What This Growth Means (and What It Doesn’t)
If you're in the field, the temptation is to ride this wave. But let’s be clear: a booming market doesn’t mean every sale is sound. Now’s the time to sharpen—not soften—your standards.
Here’s what to keep top of mind:
1. Product Complexity ≠ Client Clarity
RILAs and FIAs are surging, but their mechanics can be opaque. Don’t mistake sales growth for client comprehension. Take extra time to unpack index crediting strategies, participation caps, spreads, and how downside protection really works.
2. Suitability Must Evolve
We’re in a new environment. Market volatility, longevity risks, and inflation fears are driving more people into annuities. But if you’re recommending a 10-year FIA to a 67-year-old without liquidity needs mapped out, that’s not protection—it’s a potential penalty trap.
3. Retirement Income ≠ Product Allocation
Many advisors are still leading with product-first conversations. Flip it. Lead with the income need, build a plan, then plug in the tools. The best practice? Combine income floor strategies (like SPIAs or DIAs) with growth overlays (like RILAs) in a modular approach.
Critical Insights from LIMRA’s Report
Here’s what stood out—and what needs scrutiny:
RILAs outpacing VAs: This marks a shift in client appetite. People want market exposure with downside buffers, not pure equity risk.
FRD volatility: Sales dropped sharply in Q4 as rates declined. Advisors relying on short-term yield stories may need to reset expectations.
More innovation = more risk of overpromising: Custom indices, guaranteed income riders, performance multipliers… We need to be watchdogs, not cheerleaders, especially when marketing leans too hard on hypotheticals.
What Your Peers Aren’t Talking About (Yet)
Regulatory whispers are getting louder. As more advisors flood into the annuity space—especially RIAs who avoided it for years—expect tighter suitability and disclosure reviews, particularly for complex indexed products.
Behavioral biases are creeping into sales. Many clients are chasing recent returns or reacting emotionally to “guarantees.” It’s your job to coach—not just close.
Technology still lags in helping clients visualize how annuities integrate into holistic plans. Use the tools that exist (like income modeling software) to bridge the gap.
Conclusion: The Market’s Growing. Let’s Grow With It—Wisely.
Annuities are finally getting the attention they’ve long deserved. But scale doesn’t equal success—not if it comes at the cost of transparency, ethics, or client confidence.
So here’s the charge:
Celebrate the growth—but don’t lose your grounding.
Double-check suitability. Overcommunicate value. And commit to being the advisor who understands annuities inside and out—and puts the client first.
