Annuity regulations and products will evolve in 2026

The annuity industry is shifting quickly, and the changes coming in 2026 will demand more from every financial professional. We're getting more questions than ever about protected income, taxes and long-term planning.

Americans nearing retirement want clarity, confidence and support in making crucial decisions that will affect the rest of their lives. Those who prepare now will lead with more certainty and protect access to the trusted guidance families rely on.

Regulators are raising expectations

All 50 states have now adopted variations of the best-interest standard for annuity transactions. Not every state adopted the NAIC model verbatim, but all have raised the duty of care required for financial professionals. This higher bar requires more precise documentation, stronger disclosure and a consumer-focused process. The goal is to help families make more informed decisions about their retirement income strategies.

Regulation carries real challenges. One concern is that increased regulatory burdens could discourage many financial professionals from working with lower- and middle-income families. When professionals step back from offering retirement assistance, families lose access to support that helps them build secure futures. To combat this, financial professionals must stay informed and compliant while also keeping guidance accessible to those who rely on their expertise.

Carriers are redesigning annuity products ahead of 2026

NAIC’s new valuation manual is slated to take effect on Jan. 1, 2026. As a result, carriers are preparing for new reserve requirements for nonvariable annuities issued on or after Jan. 1, 2026. Regulators set a three-year transition window, and early field testing revealed wider-than-expected variability. Some product designs may force carriers to increase reserves, while others may allow them to decrease them. It's expected that carriers will adjust product features, benefits and pricing as they finalize their approach.

These adjustments could reshape product availability and design in the coming years. Financial professionals who incorporate annuities into their practice should be on the lookout for potential changes to the features they currently use as carriers navigate changing regulatory waters.

Tax complexity is reshaping planning conversations

The Trump administration's One Big Beautiful Bill Act introduced a patchwork of tax changes that will influence retirement planning for years to come. The industry is still waiting for the Treasury Department to issue regulations and update tax forms. This is creating confusion and making 2026 planning more difficult. Some provisions are permanent, while others expire. Families are looking for clarity as they weigh the long-term impact of their decisions.

Many consumers expect tax rates to rise, and interest in Roth conversions continues to grow. Conversions can create long-term value, but they also affect several areas impacted by the OBBBA, including the new senior deduction, the increased State and Local Tax deduction and future Medicare premiums through the Income-Related Monthly Adjustment Amount. A conversion made without reviewing the complete financial picture can lead to costly surprises just a couple of years later.

Tax conversations will require even more care in 2026. Professionals who take time to evaluate the entire plan will help consumers avoid unintended outcomes and build confidence in their decisions.

FIAs will continue driving protected income growth

Fixed indexed annuities continue to expand. Wink's Sales & Market Report recently noted 96 new FIA products through the first three quarters of 2025, a 35% increase over 2024. New carriers entering the annuity and product development space remain strong, giving financial professionals and consumers more options than ever before.

People continue to choose FIAs because they offer a balance of protection, growth potential, and alternatives for lifetime income. Late-wave baby boomers and Generation Xers are searching for ways to replace pension-like guarantees, and FIAs can fill that gap. These generations bear greater responsibility for their own retirement income, and they're seeking solutions that offer security and predictability.

Interest rates have helped strengthen product features in recent years. Even if rates soften, the need for guaranteed income will remain. Financial professionals who stay focused on long-term purpose rather than short-term rate cycles will deliver more meaningful help.

Innovation will influence annuity product value and access

Costs will continue to influence product structure. If regulatory oversight and operating expenses rise, carriers will adjust. There are only 100 pennies in a dollar. Higher expenses require trade-offs, whether through changes in product features, compensation or profit margins.

Innovation offers a path forward. Many new carriers entering the market are investing in technology to reduce friction, accelerate product development and simplify onboarding. In some cases, a financial professional can complete contracting and issue a policy within hours rather than weeks.

Advancements in artificial intelligence can support comparison, research, and analysis. Retirees still want to work with a trusted professional when making decisions about their savings, and AI can enhance the experience without replacing the human relationship.

How financial professionals can stay ahead

Preparation creates stability during any transitional phase. Strengthening awareness, sharpening product knowledge and building strong networks will help financial professionals deliver clarity and leadership. Focus on:

• Continuing education that covers regulatory and tax developments
• Strong relationships with broker-dealers, registered investment advisors, independent marketing organizations and carrier support teams
• Clear documentation and suitability process
• Understanding how changing rules affect product selection and long-term planning
• Leveraging technology to increase efficiency while preserving personal support
• Staying connected and paying attention to industry updates through reliable associations and professional networks.

Financial professionals who stay engaged with reliable sources of insight will be best equipped to lead through change and keep families covered.

A call to lead the industry forward

The coming year will test the industry in meaningful ways. Complexity will increase. Some professionals may scale back. If that happens, fewer households will receive the retirement help they need, and the industry cannot afford that outcome.

Americans deserve access to reliable direction that protects their future. Financial professionals can lead the way by staying informed, preparing early and raising the standard of consumer care. Those who act now will help retirees move into the next era of their lives with clarity and confidence, even as our landscape shifts.

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Brian Kunkel, JD, CMFC, CRPS, RICP, is Senior Vice President of Marketing Strategy and Field Services at Connect Wealth Solutions, an AmeriLife company. Contact him at [email protected].