Annuities Hold Steady—But Are We Building Portfolios or Just Selling Products?

Let’s call it what it is—MYGAs are the annuity industry's golden goose right now. But as LIMRA’s Q2 2025 report celebrates another quarter of strong sales, the real question isn't how much we're selling—it's what we're solving for.

Because if we’re only chasing interest rates and quarterly volume, not aligning products with planning outcomes, we’re not future-proofing client portfolios. We’re just padding production numbers.

The Headlines: What the Data Really Tells Us

According to LIMRA’s July 18th release, U.S. annuity sales stayed remarkably strong in Q2 2025, clocking in at $106.3 billion—virtually flat from Q1, but still up 6% year-over-year.

The biggest driver? Multi-Year Guaranteed Annuities (MYGAs), which surged to $38.7 billion, up 18% YoY. This means over a third of all annuity dollars are flowing into MYGAs alone. That’s not a trend—that’s a takeover.

Meanwhile, Fixed Indexed Annuities (FIAs) slipped a modest 4% from Q1 highs, coming in at $32.1 billion, though still posting a 12% YoY gain. Registered index-linked annuities (RILAs) also saw slight dips.

The demographically fueled “Peak 65” retiree wave continues to power this growth, while advisors seek vehicles that offer certainty, protection, and yield in a foggy rate environment.

But Here’s the Rub: Are We Over-Relying on MYGAs?

Yes, MYGAs are outperforming bonds, bank CDs, and money markets on yield right now. But a 5.5% guarantee isn’t a plan—it’s a placeholder. If advisors treat them as end-all solutions rather than strategic tools, we’re planting landmines for future client disappointment.

Ask yourself:

• What happens when that 5-year MYGA matures into a 3.25% environment?

• Have we laddered properly? Planned the next move?

• Are we using them in the context of broader income and tax strategy—or just selling to the yield-hungry masses?

If we fail to build bridge strategies now, we’ll be left backpedaling later.

Indexed Annuities: Under Pressure

FIAs remain a core component of many client portfolios—but make no mistake, cap rate compression is real. While LIMRA emphasized resilience, Insurance Journal rightly noted that carriers are quietly trimming participation rates and increasing volatility control charges.

This creates a double-edged sword:

• FIAs still offer principal protection and tax deferral—but the upside story is getting weaker.

• Advisors selling based on illustrated potential need to reassess how they communicate real-world expectations.

• Compliance under NAIC Best Interest standards now demands more than just “hope for the best” projections. Your rationale needs substance.

Now is the time to educate clients on the value of stability, not sizzle. It’s still a great product—if it’s positioned honestly.

Strategic Takeaways for Financial Professionals

1. Use MYGAs as a Strategic Bridge, Not a Final Destination
Think of MYGAs like rungs on a ladder, not the ladder itself. Use them to create short-term safety nets while mapping out longer-term solutions (FIA, income annuity, Roth conversion triggers).

2. Reassess FIA Positioning—Shift from Growth to Stability
Cap rates will likely stay compressed through year-end. Shift the client narrative from “stock market alternative” to “market-linked stability anchor.” Manage expectations. Overdelivery beats overselling.

3. Reintroduce Income Annuities Where They Belong
Despite consistent retiree demand for guaranteed income, SPIAs and DIAs remain underutilized. If clients want income certainty, let’s stop overcomplicating it. Income annuities deliver what they’re asking for—without layers of assumptions.

4. Keep Compliance Front and Center
Best interest standards are here to stay. Layered contracts? Multiple annuities? Bonus roll-ups? Document everything. And ask yourself—would this still be the recommendation if commission weren’t involved?

5. Plan Beyond the Rate Environment
The Fed may hold in 2025, but we all know rate cycles don’t last forever. Build flexible frameworks so clients aren’t trapped in low-rate renewals five years from now without a next move.

Final Thought: Sales Are Strong—Let’s Make the Planning Stronger

Annuities aren’t just selling—they’re thriving. And that’s something to celebrate. But as financial professionals, we owe it to the people we serve to go deeper than yield-chasing or product-stacking.

Let’s be the voice of reason in a rate-hype world. Let’s use this annuity momentum to build smarter, longer-lasting retirement plans.

Because a MYGA might win the moment—but a well-built strategy wins the decade.