Q1 2025 Annuity Sales: A Soft Landing or a Canary in the Coal Mine?

In a quarter where market volatility was the only consistent trend, U.S. annuity sales managed to hold the line—barely. According to preliminary LIMRA data, total annuity sales reached $105.4 billion in Q1 2025, marking a modest 1% year-over-year decline from Q1 2024. That may sound like a rounding error, but the details beneath the surface tell a more complex story—one that should matter deeply to anyone helping clients navigate retirement.

This isn’t just about numbers. It’s about how clients are behaving, what they fear, and how we, as an industry, are responding—or failing to.

Flatline or Fracture?

Let’s start with what happened:

• Fixed-Rate Deferred (FRD) Annuities dropped 8% YOY, totaling $39.5B—but still made up 38% of all annuity sales.

• Fixed Indexed Annuities (FIA) fell 7% YOY to $26.7B—yet still notched the fifth-highest quarter in FIA history.

• RILAs (Registered Index-Linked Annuities) surged 21% to $17.5B, reflecting growing appetite for structured risk.

• Traditional Variable Annuities rose 14%, continuing a five-quarter climb.

• Income Annuities (SPIAs & DIAs) saw double-digit drops, falling out of favor in a shifting rate environment.

At a glance, this looks like a reshuffling of the deck rather than a structural decline. But here’s the rub: most of the “good” sales came late in the quarter—specifically in March, when the economy wobbled and investors went risk-off. That reactive behavior isn’t long-term planning. It’s financial panic wrapped in a guarantee.

A Story About Trust and Timing

The March mini-surge in FRD annuities wasn’t strategic. It was emotional. Clients flocked to guarantees not because they were educated on their options—but because the headlines scared them.

That should give us pause.

If annuity sales are increasingly tied to fear spikes in the news cycle rather than long-term planning conversations, then we’re not just product distributors—we're financial firefighters. And that model is neither sustainable nor in the best interest of clients.

Three Critical Challenges This Quarter Exposed

1. Short-Term Panic is Driving Long-Term Decisions

Clients making annuity decisions in response to volatility are prioritizing guarantees—but often at the cost of growth. Are we equipping them to understand trade-offs? Or just capitalizing on urgency?

2. The Product Mix is Evolving Faster Than the Salesforce

The 21% rise in RILAs suggests that clients want a blend of safety and upside—but RILAs are complex, come with SEC oversight, and require serious advisor education. Are we meeting that bar?

3. Interest Rate Sensitivity is Hurting Income Annuities

Income annuities took a nosedive—down 17–19% YOY. That’s a flashing red light for advisors still using outdated “income floor” frameworks without adjusting for current rate realities.

What Advisors Can Do Now

Reframe the Conversation from “Fear-Based Guarantees” to “Confidence-Based Planning.”
Educate clients before the panic sets in. Use volatility as a case study, not a sales trigger.

Get Fluent in the New Product Landscape.
If you’re not confident discussing RILAs, you’re behind. They’re here to stay, and their hybrid value prop (structured growth + downside buffer) is resonating across demographics.

Anticipate Client Behavior Instead of Reacting to It.
March proved that economic news drives behavior. Build plans that account for emotional pivots—not just rational spreadsheets.

This Isn’t Just About Sales

Let’s be honest—some in our industry will see these numbers and push harder for FRDs next quarter. But doing so without context, education, or suitability just reinforces every critique the annuity space has ever earned.

If we want to legitimately advocate for annuities as powerful retirement tools—and we should—we have to lead with strategy, transparency, and long-term client outcomes.

Our job isn’t to sell the guarantee that makes a client feel better today. It’s to design the plan that serves them tomorrow—even when the market, and their emotions, swing.

Final Thought: Don’t Just Watch the Trend—Shape It

Q1 2025 wasn’t a collapse. It was a recalibration.

But if we’re not careful, the industry will interpret “only down 1%” as a green light to continue business as usual. And that would be a mistake.

This is the perfect moment to rethink how we talk about annuities, how we educate clients, and how we position ourselves—not as crisis managers, but as proactive architects of lasting financial security.

Let’s not wait for another market scare to make our case. Let’s build it now.