Growth of Annuity Sales in the U.S. and Market Trends
Annuity sales in the United States are experiencing significant growth, with forecasts suggesting sales will reach approximately $461.3 billion in 2025, marking a 6% increase from the previous year. Indexed annuities have captured attention within the market, accounting for nearly half of all annuity sales, according to preliminary data from LIMRA. This trend highlights the increasing consumer demand for diversified insurance products designed to meet evolving retirement planning needs.
Index-Linked Annuities: Key Drivers of Market Growth
In the last quarter of 2025, annuity sales surged by 12%, reaching $114.4 billion—a milestone marking nine consecutive quarters of sales exceeding $100 billion. Indexed annuities, including both registered index-linked annuities (RILAs) and fixed indexed annuities (FIAs), accounted for 45% of total sales in 2025, a notable increase from a decade ago. Bryan Hodgens, Senior Vice President and Head of LIMRA Research, attributes this growth to elevated capacity, diversified product offerings, and robust distribution channels.
This strategic shift toward index-linked designs has lowered capital requirements for insurers and has been bolstered by increased investor demand. The industry's efforts to position these products as essential components of retirement planning have been successfully supported by wholesalers, independent marketing organizations, and broker-dealers. LIMRA anticipates continued expansion of RILAs and FIAs through 2028.
Traditional Variable Annuities and Market Dynamics
Despite the growing preference for indexed solutions, traditional variable annuities (VAs) recorded sales of $18 billion in the fourth quarter, an 8% increase from the previous year. For all of 2025, VA sales amounted to $65.2 billion, a 7% annual increase. However, as both investors and insurers prioritize lower-risk indexed and fixed-rate products, VAs represent a smaller market share than in previous years.
Fixed-rate deferred (FRD) annuities displayed mixed sales patterns, with fourth-quarter sales declining by 24% from the previous quarter yet up by 12% year-over-year at $32.8 billion. Annually, FRD sales increased by 5% to $160.6 billion. According to Keith Golembiewski, Assistant Vice President and Head of LIMRA Annuity Research, while FRD sales spiked during the third quarter, they may taper off in 2026 with the anticipated decrease in short-term rates.
Regulatory Compliance and Future Outlook
Income annuities showed moderate improvement, with single premium immediate annuity (SPIA) sales increasing by 12% in the fourth quarter to $3.5 billion, boosting full-year sales by 3% to $14 billion. Deferred income annuities (DIA) saw a 20% rise in fourth-quarter sales, reaching $1.4 billion, though annual sales declined by 3% to $4.8 billion.
Factors such as product innovation and favorable demographics contribute to the continued growth of annuity products, according to Hodgens. The industry must navigate evolving regulatory compliance requirements and distribution frameworks, alongside discussions regarding fiduciary and best-interest standards for annuity sales recommendations. Insurers, broker-dealers, Registered Investment Advisors (RIAs), and marketing organizations face challenges in sustaining growth amid heightened regulatory expectations related to product suitability and advisory practices.