Growth of Individual Annuity Market in 2025: Trends and Insights
In 2025, the U.S. individual annuity market saw a notable expansion of 6% year-over-year, achieving an estimated $461.3 billion in sales, as reported by preliminary LIMRA data. Indexed products played a critical role, accounting for nearly half of the market's total volume. In the fourth quarter alone, sales surged by 12% to $114.4 billion, reflecting a strong and sustained demand in this segment.
Bryan Hodgens, Senior Vice President and Head of LIMRA Research, highlighted the increasing market share of indexed products, comprising registered index-linked annuities (RILAs) and fixed indexed annuities (FIAs). Over the past decade, these products have significantly grown, now representing 45% of total sales. Hodgens credits this expansion to enhanced product offerings, broadened distribution channels, and rising investor interest, with LIMRA predicting further growth in these segments through 2028.
Life insurance companies are strategically transitioning from traditional variable annuities, which generally require more capital, to indexed annuity products, which offer a more stable risk profile and lower capital requirements. The involvement of wholesalers, independent marketing organizations, and broker-dealers has been crucial in establishing indexed annuities as a cornerstone of retirement income planning.
In 2025, FIA sales experienced modest growth, reaching $128.2 billion. This marked the fifth consecutive year of growth. Contrarily, RILA sales achieved exceptional highs, with a 24% increase in the fourth quarter, resulting in annual sales of $79.6 billion—a tenfold increase from ten years ago. Keith Golembiewski, Assistant Vice President and Head of LIMRA Annuity Research, anticipates that RILA sales could exceed $85 billion in 2026.
The rise in RILA and FIA sales intensifies competitive pressures on product design, hedging strategies, and advisor education, all under stringent regulatory compliance requirements for the sale of these complex products. Despite an 8% increase in traditional variable annuity sales to $18 billion in the fourth quarter, their overall market presence has waned compared to a decade ago as insurers and investors lean towards indexed and fixed-rate alternatives.
The fixed-rate deferred (FRD) annuity segment showed mixed results. Fourth-quarter sales decreased by 24% from the previous quarter yet exhibited a 12% year-over-year increase. LIMRA projects a possible decline in FRD sales in 2026, influenced by expected interest rate changes that might impact their popularity.
Income annuities displayed slight growth, with single premium immediate annuity (SPIA) sales rising 12% in the fourth quarter, reaching $14 billion for the year. Meanwhile, deferred income annuities (DIAs) recorded a 20% surge in fourth-quarter sales, although overall annual sales declined by 3% to $4.8 billion. Hodgens emphasized that product innovation and demographic trends are crucial drivers of the annuity market's expansion.
The consistent growth of the annuity market unfolds within a landscape of evolving regulatory demands and distribution frameworks, particularly surrounding fiduciary standards for annuity recommendations. LIMRA underscores the challenge for carriers, broker-dealers, and marketing organizations to sustain growth while maintaining robust suitability and regulatory compliance processes amid an increasingly diversified product landscape.