Annuities hit nirvana moment –will it last?

Annuity sales are smashing all historic records as consumers flock to protection products. But game-changing federal regulation looms.

By John Hilton

Annuity sellers are sitting atop a mountain of goodness.

Nearly all product lines are selling strong or boast a positive outlook, and successful technology adoption is proceeding with alacrity. States coast to coast are adopting the industry-favored best-interest sales rules.

It’s all contributing to sales so strong that calling them simply “record breaking” almost undersells the market heat — more like record shattering. Firstquarter annuity sales totaled $92.9 billion, a 47% increase from the prior year, according to LIMRA’s U.S. Individual Annuity Sales Survey.

That follows sales of $310.6 billion in 2022, a 22% increase from 2021 results and 17% higher than the record set in 2008.

rule forced the industry into a costly revamp of sales practices. It also swung many more potential annuity sales into the unsuitable category.

And the bottom line suffered. In 2017, annuity sales plunged to $204 billion, the sales nadir of the past decade.

Jim Szostek is vice president and deputy, retirement security for the American Council of Life Insurers.

“Fiduciary-only advisors generally require account holders to invest at least $100,000 up front,” Szostek said. “It is also worth noting that fiduciaries charge a fee for advice, generally on an ongoing basis based on assets under management. This works for those with significant assets.

“But it doesn’t work for most working-class families who are most likely to benefit from income guarantees in retirement through an annuity.” deferred annuities and indexed annuities, which shield owners from the volatility of stocks and bonds.

Even a solid rebound for equities this year — the S&P was up nearly 7% as this issue went to press — is doing little to subdue the desire for protection annuities.

“Market conditions continue to drive investor demand for annuities,” said Todd Giesing, assistant vice president, LIMRA Annuity Research. “Every major fixed annuity product line experienced at least double-digit year-over-year growth.”

Demand for annuities is so strong, many carriers are having trouble keeping up. Industry social media chatter is buzzing with talk of annuity applications delayed for weeks.

“We obviously had a ton of volume coming through in protection-focused annuity product,” Giesing explained. “And that was simply a distraction. We’re