2026: The industry responds to an aging population

The past year was a growth year for U.S. life insurance sales, with momentum building each quarter. For annuities, the story was even bigger, with 2025 showing a continuing sales surge and annuity sales hitting quarterly and year-to-date records.

The new year promises to see a cooling off on the life side of the industry, while annuity sales will continue to show strength, according to LIMRA. One main factor influencing the industry: the aging of the U.S. population.

Consumer interest in life insurance has leveled off but remains higher than prepandemic levels, Bryan Hodgens, head of LIMRA research, told InsuranceNewsNet.

“We saw a nice little bump up in life insurance sales during the pandemic that sort of sustained itself, but it’s flatlining a little bit at this point,” he said. 

LIMRA predicts individual life insurance premium in 2026 to increase between 2% and 4% over the prior year. 

“Looking at that 2% to 4% growth, I think a couple of different factors will drive it,” Hodgens said. “I think we will see more of that growth in accumulation products, and we [will see] growth in the final expense market.”

LIMRA’s 2%-4% premium growth prediction “is pretty much in line with what we’ve been saying over the last several years,” he said. “It’s interesting that 2025 was a bit of an acceleration over that to the 2%-5% that we predicted for that year, which was a bit of an outlier.” 

But that projected premium increase will not impact all product lines equally.

Indexed and variable universal life could see a drop in sales, Hodgens predicted. 

“We’ve seen a lot of run-up in those product lines in 2025, and it really started late in 2024, [but] we’re not seeing as many bigger policies and larger premiums being written. I think that market, that opportunity, is sort of maturing. So I think we’re going to see a little bit of a pullback there.”

Economic factors will influence life insurance sales as consumers have many products and services competing for their dollars.

“I think that when you look at the consumer and the demographic, you look at increased  tightening of economic conditions — unemployment, high consumer prices and there’s still this pesky little thing called inflation sitting out there — I think that it impacts the disposable income that’s available for life insurance, and it’s competing against other investment products. I think this will continue to play out in 2026.”

An aging population also will influence life insurance sales in 2026, Hodgens said.

LIMRA recently conducted a study with Capgemini on worldwide demographics, in which LIMRA surveyed the under-40 consumer.

“The reality is that whether it’s in the U.S. or outside the U.S., we have an aging population,” Hodgens said. “We have fewer people coming in behind it. Birth rates are down. People are delaying some of their life events — things that typically have been triggers for life insurance purchases — such as getting married, having kids, buying a home. All of those traditional triggers for life insurance purchases are getting delayed and happening less frequently.”

While the younger generations don’t appear to be quite ready to buy life insurance yet, the over-60 population has become a saturated market, he said.

“We’ve sold this group a lot of life insurance over time, and we’ve tapped out that market to a certain degree. How much more growth will we get out of that?”

That leaves Generation X, generally referred to as people born between 1965 and 1980. The older members of this age group are hitting age 60, while the youngest are in their mid-40s. This group is looking at a looming retirement as well as financial obligations to both children and aging parents and is a prime market for annuity products.

LIMRA is working with the Alliance for Lifetime Income and will focus some of its research on Gen X in 2026, Hodgens said.

“For annuities, Gen X is right in the sweet spot,” he said. “We know that the average age for purchasing an annuity is around age 64. The U.S. is in Peak 65 right now and Gen X is approaching retirement age, so we see Gen X as a good market for annuities.”

Annuity sales could set another record in 2026

While life insurance premium is expected to level off in 2026, it’s a completely different story when it comes to annuities.

LIMRA predicts annuity sales will set another record this year — between $438 billion and $485 billion in total sales. One big factor driving those sales will be the growth of in-plan annuities.

Annuities are increasingly being incorporated into employer-sponsored retirement plans — especially 401(k), 403(b) and other defined contribution plans — as plan sponsors look for ways to help employees convert savings into predictable retirement income. Recent legislative changes, particularly under the SECURE 2.0 Act, have expanded how annuities can be used inside these plans.

“We’ve seen this movement over the last several years, with annuity products now available in the workplace, and we will see more of that adoption there. So I think that’s a growth engine for the annuity space overall going into 2026,” Hodgens said.

He said falling interest rates might make deferred fixed annuities less attractive, and he expects to see some pullback in that category. But growth in other annuity categories — especially registered index-linked annuities — will continue to soar.

“This particular product has seen record growth, year over year, every year since the product was brought to market in 2011, and 2026 will be no different,” Hodgens said. “We predict 2026 will be another record year for RILAs.”

Demographics drive product innovation

An aging population is not only driving sales in certain product categories, but it is also driving product innovation.

Living benefits inside life insurance products will continue to increase as consumers look for ways to pay for future long-term care, Hodgens said.

“We will see more innovation in life/combo policies, where long-term care riders have been included in life insurance,” he said. “I think you’ll see other types of living benefits that will show up on the life insurance side. But for long-term care, it plays into the demographics of an aging population.”

Living benefits are becoming increasingly popular with consumers who are at least a decade or so away from needing care.

“Younger generations are looking at these combo policies and buying them now, saying, ‘It’s cheaper for me now. I know I’ll need it after watching my parents and grandparents face long-term care needs,’” Hodgens said. 

With the majority of Americans predicted to need some kind of care in their later years, the life insurance industry “is leaning back into this long-term care space because they see the opportunity,” he said. Carriers have learned how to better model future risk and price products more accurately. 

LTC riders aren’t just for life insurance. More annuity products also are including LTC riders, which Hodgens described as “essentially accelerated benefits.”

“If you have a guaranteed income stream built into your annuity products and you have a long-term care rider associated with that income stream, the accelerated benefit allows you to accelerate that — maybe double that or triple that income stream that you would get because you’re in a long-term care event.”

Annuities with LTC riders are relatively new to the market. “We don’t see a lot of growth in this yet, but I do think we’ll see some of that uptick over time because the opportunity is there,” Hodgens said.

Technology improves the buying experience

Consumers demand a better buying experience, and the industry will continue to personalize that experience in the digital environment, Hodgens said. Artificial intelligence will play a greater role as well.

“AI is already playing a role,” he said. “Insurance companies can look at consumers and have predictive data analytics on those consumers, looking at their buying behavior and demographics, and having predictive models on how to approach consumers and how to personalize that experience.”

AI already is at work as insurers collect data about consumers and personalize the buying experience for them. 

“How carriers are underwriting, how they’re processing things, how the industry’s having customer service experiences — AI is already there, and it’s already having a positive impact,” Hodgens said. “Now when you multiply it forward, it’s only going to get better. 

“I think that we’ll start to see AI and technology as they try to transcend more into the consumer experience and the advisor experience. Advisors will be able to connect quicker and better and more efficiently and [make it] more personalized to the consumer. The consumer will be able to connect to the advisor. We’ll see some interesting breakthroughs and some really cool things going forward. It will be a better client experience, a faster and more personalized experience.”

Holistic planning will continue

The trend of holistic planning shows no signs of going away. Hodgens said that advisors and the industry must tailor advice and position products to appeal to younger generations.

“But what doesn’t change is, what is life insurance for? It’s a product of risk mitigation, of dying too soon, of having liabilities and having loved ones you want to take care of.”

What has changed, he said, is to think about life insurance in terms of what else it can do other than providing a death benefit. Can life insurance do something for the policyholder while they are still alive?

“I think that will be the big shift from a planning perspective around the living benefit side of life insurance and annuities. On the annuity side, it’s the flip side of life insurance — it’s the risk mitigation of living too long. Do I have enough income to last during my lifetime?”

Hodgens said advisors who want to incorporate annuities and life insurance into holistic planning can provide clients with what he called “a beautiful little lineup of income and risk spectrum across those products.”

Susan Rupe is editor in chief, magazine, for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].