What’s fueling record annuity growth?

By Ayo Mseka

U.S. annuity sales topped $107 billion in the first quarter of this year, LIMRA reported, representing a 1% increase over the same period last year. Kush Kotecha, president of Nationwide Annuity, looked behind the numbers to explain the reasons for this growth and shared a few steps that financial professionals can take to set themselves apart in today’s competitive marketplace.

The increase in sales has extended across several types of annuities. LIMRA reported that first-quarter traditional variable annuity sales increased year over year — building on the stronger momentum seen in the second half of 2025. And in the first quarter of 2026, traditional VA sales rose 17% to $17.2 billion, compared with the first quarter of 2025.

In addition, registered index-linked annuity sales continued to outpace traditional VA sales growth in the first quarter of 2026 – increasing 20% year over year to $21.1 billion. And income annuity sales increased in the first quarter as demand for protection continued to drive consumer interest, LIMRA said. Single premium immediate annuity sales reached $3.7 billion, a 22% increase from prior year results, while deferred income annuity sales totaled $950 million, up 5% year over year.

Factors fueling this growth

What are some of the reasons for this increase in sales?

“The market delivered a strong quarter to start the year, increasing 1% compared to the same period last year and bringing in $107.4 billion in sales,” Kotecha said. “Although this represents an 8% decline from the previous quarter, this follows a known trend in the industry, as the first quarter of the year historically represents a seasonal slowdown for individual annuity sales.”

Kotecha added that sales continue to be fueled by consumers prioritizing solutions that provide financial protection and guaranteed income as they directly address some of the biggest risks facing today’s retirees. For example, he said, uncertain economic conditions - such as inflation, interest rate changes and stock market fluctuations - can be balanced through annuity solutions that reduce exposure to volatility and provide predictability through guaranteed income.

Demographics are also helping sustain demand, Kotecha said. “We are still in the Peak 65 wave, with more Americans turning 65 than at any other time in history. With a significant portion of this generation nearing retirement without a pension, annuities remain an important option for generating protected income.”

What to expect for the rest of the year

In explaining what to expect for the rest of 2026, Kotecha said that inflation, interest rates and equity markets will continue to shape the annuity market during the second half of the year as investors seek out protection-based solutions offering guaranteed income for retirement security.

He added that while LIMRA reported first-quarter results marked the 10th consecutive quarter of $100 billion or more in sales, he does not anticipate that momentum to slow any time soon. Investors will continue to look for ways to protect their savings from market risk, grow their assets and guarantee income in retirement. However, Kotecha noted that annuities can provide protection and guaranteed income in any economic environment and at all stages of the financial life cycle.

Inflation will remain an important planning consideration for advisors as consumers look for ways to preserve purchasing power, Kotecha said. According to the Labor Department’s most recent report, U.S. inflation jumped to 4.2% in May, the highest level in three years. In a volatile market, VAs and fixed indexed annuities are great ways to keep up with inflation over a longer period. “Both can provide consumers with a foundation that helps provide protected lifetime income, while the rest of their portfolio can be allocated to assets to help protect against inflation,” he said.

Interest rates will also matter. Nationwide's Office of Economics believes the Fed will hold rates steady in 2026. “If rates do move lower, fixed annuities could become less popular, although the heightened equity market volatility we’ve seen could continue to drive demand for principal protection and buoy fixed annuity sales,” Kotecha said.

Equity markets are also likely to remain strong but volatile, fueling continued demand for VAs and RILAs, Kotecha said. Consumers should look for carriers that prioritize differentiation and enhanced value in these products.

Setting yourself apart

Personalization will continue to be crucial in this industry in the future, Kotecha said, as he shared some steps financial professionals can take to set themselves apart from their competitors. Consumers, he said, want solutions that align with their specific goals, timelines, and lifestyles. While flexible product features will continue to matter, experience matters too.

For example, Kotecha said, according to JD Power, customers who felt their last annuity contact was tailored to their individual needs have an overall satisfaction score that is 143-points higher than those who didn’t feel contact was tailored to them. “Advisors should focus on offering personalized communications and onboarding services, including financial plan documentation, financial goal strategies and detailed fee explanations,” he added.

Technology can help make that possible, Kotecha said. Data analytics and digital tools can streamline operations, improve responsiveness and create a smoother client experience. According to a recent Nationwide survey, financial professionals who sell annuities are already using a variety of software and financial technology platforms in their practices, including financial planning software, customer relationship management platforms and performance reporting software.

“As the industry moves toward faster, more standardized processes, advisors who embrace these tools will strengthen client engagement and work more efficiently,” he said.

Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected].