Annuity industry looks to innovation, product design to spur growth

The annuity industry is navigating choppy waters, but insurers are steering hard toward innovation in product design, distribution, and technology to stay afloat and position for long-term growth, according to the 2025 Annuity Industry Survey by Goldman Sachs Asset Management.

Gathered during a particularly volatile stretch this spring — around the time of the “Liberation Day” shock — the survey’s responses reflect a jittery macroeconomic backdrop: fears of recession, rate uncertainty, geopolitical instability, and renewed concern over trade and tariffs. Still, the mood is not panic — it is strategic adaptation.

“This year’s survey reveals that insurers are laying the groundwork for the next era of retirement planning, where guaranteed income, personalized advice, and tech-enabled distribution all work together to serve investors with more sophisticated needs,” said Marci Green, head of retirement distribution for Goldman Sachs.

RILAs cited as top product development focus

Registered index-linked annuities (RILAs) — now accounting for more than half of variable annuity sales nationally — remain the industry’s darling. Seventy-seven percent of survey respondents cited RILAs as a top product development focus, with growing interest in customizable crediting strategies and managed volatility indices.

But looking ahead, the horizon is shifting. Within three years, respondents believe the dominant trend will no longer be RILAs, but rather in-plan annuity adoption — those embedded directly into retirement plans like 401(k)s. Nearly 80% of insurers now cite in-plan income as a top three business priority, and 56% are already active in the space.

Integration with managed accounts and target-date funds is expected to drive the next leg of growth, although adoption is modest for now. “There’s real optimism that in-plan annuity solutions will evolve from niche to norm,” the report said.

'Old school' VA surge in interest

Even as RILAs flourish, insurers are hedging their bets by reviving more traditional variable annuities with guaranteed lifetime income riders. Interest in these “old school” VAs surged from 44% last year to 60% in 2025 — a signal that diversity and durability are taking priority amid market uncertainty.

Similarly, defined outcome strategies, such as buffered annuities and outcome-based variable insurance trust (VIT) funds, are finding traction. Carriers say these products appeal to clients looking for more options and downside protection, especially when equity markets are unpredictable and fixed income yields limited relief.

With fears of a U.S. slowdown rising — 39% of respondents now expect a recession in 2025 — insurers are also shaking up their investment platforms. Traditional U.S. equity-heavy menus are giving way to global diversification. The biggest allocation increases over the next year are expected in international developed equities, private credit, and private equity. Interest in emerging markets and cash equivalents is also rising.

At the same time, fixed income is still out of favor, not cracking the top five in new allocation targets for a second year running.

Execs expect AI to play a role

In a striking sign of the times, nine out of 10 annuity executives now expect artificial intelligence to play a pivotal role in educating consumers and advisors about the benefits of guaranteed income.

About half already use AI to boost sales efficiency, and another quarter use it for risk underwriting or investment distribution.

Survey respondents see AI as a powerful tool not just for streamlining operations but also for expanding annuity adoption — especially among tech-savvy, advice-hungry investors. Personalized digital advice and predictive analytics are no longer futuristic concepts; they are seen as essential features of the next-gen distribution ecosystem.

Another subtle but important shift is occurring in distribution priorities. For years, insurers targeted independent advisors and wirehouses. Now, 45% of respondents believe the registered investment advisor (RIA) channel will see the most growth over the next three years. This tracks with broader wealth industry trends, where RIAs increasingly serve high-net-worth clients and seek customizable income solutions.

To support that, insurers say they value partnerships that bring strong distribution support, existing record keeper and consultant relationships, and personalized technology to the table. They are also looking for investment managers that can help embed income features directly into managed solutions.

Later life guaranteed income sought by clients

Despite the technical innovation, the basic investor need is still clear: clients want guaranteed income, especially for later life. The top goal cited by insurers’ clients is a consistent income stream throughout retirement, followed closely by longevity protection. Optionality, education, and plan design defaults were seen as the most promising ways to increase adoption.

“Improving retirement outcomes starts with better product design — but it also requires clear communication, seamless distribution, and the right incentives baked into plan structures,” the report noted.

The 2025 survey — based on responses from 103 annuity professionals across 31 carriers with more than $100 trillion in combined assets — paints a picture of an industry that is cautious but constructive.

While macro risks loom large, the direction of travel is unmistakable: broader investment platforms, smarter products, embedded annuities, and AI-powered engagement. For insurers willing to innovate across all four fronts, the opportunity may be just beyond the horizon.

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].