Consumer knowledge gap persists despite booming annuity sales

Radnor, Pa., June 3, 2024- Annuity sales are surging to record levels in the U.S. In Q1 2024, total U.S. annuity sales were $113.5 billion in the first quarter of 2024 — the highest first quarter sales results since LIMRA started tracking sales in the 1980s. Yet, as we celebrate the growth in this market, we must also recognize that the majority of Americans neither own nor understand annuities. In fact, only 12% of U.S. households own an annuity.

In a new report, Lincoln Financial Group found that a knowledge gap persists among the majority of Americans — including clients of financial professionals and even annuity owners — when it comes to understanding the features and benefits of annuities. Only 9% of consumers say they feel very knowledgeable about annuities. And, among consumers who own an annuity, still only 32% said they feel very knowledgeable about annuities, Lincoln Financial found.

So, where is the disconnect? In conjunction with Annuity Awareness month, let’s breakdown the new data and common misconceptions about annuities.

According to the new Lincoln Financial research, roughly two-thirds of consumers aren’t making the connection between the top investment features they want, and the value annuities can provide. With that large of a disconnect, most consumers are likely missing many potential benefits of annuities. Here are just a few of the misconceptions or knowledge gaps among consumers:

The reality is that annuities may be a good choice to help meet these investment needs, and more. Annuities are available with a variety of features, benefits and costs. They provide protected lifetime income and can help boost consumer confidence in times of uncertainty and market volatility. Some annuities even offer opportunities for growth with full protection from loss. The annuity business has come a long way over the last 10 to 20 years — it’s not a one-size-fits-all approach.

To help extend the annuity marketplace to the remaining 88% of U.S. households who don’t currently own an annuity as part of their financial plan, we must do more to educate consumers on the diverse features available with annuities today to help meet their investment needs.