Why Fixed Indexed Annuities are Taking Over the Industry

This isn’t the first time that I’ve discussed the popularity of fixed indexed annuity products lately, but it’s all over the news. In the latest LifeHealthPro article, “FIA sales skyrocket as VA sales wane,” Peggy Bresnick summarized last year’s sales and talked about why indexed annuities are being used so much more for retirement planning. It has been eight straight years that we have seen increases in fixed indexed annuity sales. That’s a big deal in the insurance industry. Much of that growth can be attributed to the changing landscape and needs of people nearing retirement. Variable annuity flows had their highest numbers in 2007, which was really the height of the living benefits competition. Since then, variable annuity flows have not grown and many insurers have eliminated the living benefits that these annuities used to be known for.

LIMRA Secure Retirement Institute collected annuity sales data for their U.S. Individual Sales Survey. Fixed indexed annuity sales were $54.5 billion last year, which was an increase of 13% from 2014. That was the highest sales figure that these products have ever reached. Fourth quarter sales were record breaking too. The sales of $16.1 billion were 34% higher than the fourth quarter of 2014. On the flip side, variable annuity sales were down 5% from 2014 to 2015. During the fourth quarter, sales were $31.7 billion, which was 7% less than the previous year. You can see though, that variable annuity sales are still double the sales figures of fixed indexed annuity products. Many experts don’t think it will be too long, however, before fixed indexed annuity sales are higher than variable annuity sales.

Fixed indexed annuity sales increases can’t only be attributed to the top selling insurers; many different insurance companies are leading this growth. A lot of insurers who previously focused on variable annuity products are seeing success in the indexed annuity market now as well. Investors are showing more interest in the benefits offered by fixed indexed annuity products. Bonds and traditional variable annuities have lost a lot of their appeal, while indexed annuity benefits have grown in appeal over the past few years. Advisors said that the benefits most often sought by clients are market upside potential coupled with downside protection, an option for lifetime income, tax deferral, the potential to earn higher returns than with CDs, flexible choices for linking indexes, and their usefulness in IRA plans. With all of these available benefits, it’s no surprise that the vast majority of advisors surveyed are selling way more fixed indexed annuities now than they are variable annuities.

As variable annuity sales slowly decline, fixed indexed annuities are gaining momentum because their benefits match up to current consumer demands.

Written by 

Follow Rachel, aka Finance Mama, on Twitter and Google+

Comments are closed.


Copyright © 2020 AFYI Holdings Group, LLC. All Rights Reserved. No part of this article may be reproduced without the express written consent of AFYI Holdings Group, LLC.

Annuityfyi.com - Prefooter


Mailing Address:

1165 NE 105 St.
Miami Shores, FL 33138




(866) 223-2121

Follow Us On

Click for the BBB Business Review of this Annuities in Miami Shores FL

Copyright © AFYI Holdings Group, LLC, All Rights Reserved

Share On Facebook
Share On Twitter
Share On Linkedin
Share On Pinterest