Annuity Sales Hit Record Yet Adoption Gap Persists: What 2026 Research Reveals
US annuity sales totalled $107.4 billion in the first quarter of 2026, extending a sustained run of quarterly sales above $100 billion, according to LIMRA’s US Individual Annuity Sales Survey. Yet the record figures mask a stubborn problem: consumers who need guaranteed retirement income the most are still not buying it, and new academic research suggests that more education alone will not close the gap. At the same time, millions of Americans continue to rely on crowdfunding campaigns instead of life insurance to cover end-of-life expenses, a pattern that industry leaders are calling unsustainable.
This post examines three recent developments that together paint a picture of the retirement income and life insurance adoption gap in mid-2026: LIMRA’s Q1 annuity sales data and the behavioural barriers identified by its chief marketing officer, a new National Bureau of Economic Research working paper on financial literacy and annuity purchasing decisions, and a TruStage executive’s call to reframe life insurance as proactive planning rather than a reactive stopgap.
Q1 2026 Annuity Sales: Where the Growth Is — and Where It Isn’t
The first-quarter product breakdown from LIMRA tells a story about where consumers are gravitating in an uncertain rate environment. Registered index-linked annuities rose 20% year over year to $21.1 billion, and traditional variable annuities climbed 17% to $17.2 billion — both benefiting from demand for products that offer market participation with some downside protection. Single premium immediate annuities gained 22% to $3.7 billion, and deferred income annuities rose 5% to $950 million.
The rate-sensitive fixed products told a different story. Fixed-rate deferred annuities fell 12% to $35.6 billion, and fixed indexed annuities slipped 4% to $26.8 billion, reflecting consumers shifting away from products whose relative attractiveness diminishes as rate expectations become less certain. The full-year 2025 annuity sales total reached $464.1 billion, a 7% increase and the fourth consecutive annual record.
“While economic conditions remain uncertain, consumers continue to prioritise financial protection and guaranteed income solutions as they prepare for retirement,” said Bryan Hodgens, senior vice president and head of LIMRA research. “As investors navigate shifting market conditions and questions around the future path of interest rates, we expect demand for annuity products to remain elevated through 2026.”
The Adoption Gap: Why Record Sales Coexist with Under-Adoption
The more analytically interesting question is why record sales coexist with persistent under-adoption relative to the scale of retirement income need. Tina Beckwith, chief marketing officer of LIMRA and LOMA, addressed this directly in the organisation’s June MarketFacts publication. She identified three primary barriers — loss aversion, decision paralysis around complex products, and an underestimation of longevity risk — none of which are addressed by additional product education.
Beckwith made a specific counterintuitive observation: more consumer education can reinforce the perception that annuities are too complicated rather than reducing it. Her recommended alternative is to reframe lifetime income around outcomes — describing the approach as a “personal pension” — rather than leading with technical features or rate comparisons. She called on carriers and advisors to standardise plain-language messaging and normalise partial allocation to guaranteed-income products, presenting annuities as one component of a retirement income plan rather than an all-or-nothing decision.
LIMRA has tied the multiyear sales run to what it calls Peak 65 — the period in which more than four million Americans turn 65 annually, many without pensions to cover basic retirement costs. That demographic pressure gives the adoption gap its practical urgency: the cohort most likely to need guaranteed lifetime income is arriving at retirement at scale, while behavioural barriers continue to limit the conversion of need into product uptake.
Q1 2026 Annuity Sales by Product Category
| Product Category | Q1 2026 Sales | Year-over-Year Change | Trend Driver |
|---|---|---|---|
| Registered Index-Linked Annuities | $21.1 billion | +20% | Market participation with downside protection |
| Traditional Variable Annuities | $17.2 billion | +17% | Equity market exposure demand |
| Fixed-Rate Deferred Annuities | $35.6 billion | -12% | Shifting rate expectations |
| Fixed Indexed Annuities | $26.8 billion | -4% | Diminishing relative attractiveness |
| Single Premium Immediate Annuities | $3.7 billion | +22% | Guaranteed lifetime income demand |
| Deferred Income Annuities | $950 million | +5% | Longevity risk hedging |
New Research: Financial Literacy Alone Won’t Close the Gap
A new working paper from the National Bureau of Economic Research adds another layer to the adoption gap puzzle. Jeffrey R. Brown, a professor of finance at the University of Illinois Urbana-Champaign and a member of the TIAA board of trustees, analysed what existing studies show about the relationship between financial literacy and annuity use. His finding challenges the conventional industry assumption that education is the primary solution.
Brown found that retirement savers who understand what annuities are and how they work may not be much more likely to buy annuities than anyone else. “Rather, financial and longevity literacy are likely to help individuals do a better job of determining whether additional annuitization is appropriate for them,” he wrote. The paper identified a factor other than lack of financial literacy as a contributor to low annuity use: lack of longevity literacy. Even when people know their life expectancy, they “frequently fail to appreciate the substantial probability of living well beyond the mean.”
Brown concluded that the main obstacle is that lifetime income products are complicated and choosing them is hard, even for people who know how interest rates, inflation, and annuities work. “Literacy improves individuals’ ability to engage with complex choices, but it does not eliminate cognitive limits, learning constraints, or emotional responses to mortality-related decisions,” he wrote. He noted that low annuitisation rates may reflect avoidance of complex and opaque products rather than informed rejection of longevity insurance.
What the Research Means for 401(k) Plan Sponsors
Brown offered specific recommendations for sponsors of 401(k) plans and other defined contribution retirement plans who want to offer participants annuitisation options. He suggested that sponsors offer savers a carefully tailored menu of lifetime income options, to avoid causing participants who want a default option to choose an option that fits poorly. He also recommended giving participants a chance to test a lifetime income option for a year or two before locking it in, allowing them to experience the product before making an irrevocable decision.
For advisors and insurance professionals, Brown’s key takeaway was not to steer clients toward or away from annuities. Instead, he recommended helping them understand tradeoffs such as liquidity versus guaranteed income, longevity protection versus flexibility, and the range of retirement income strategies available. The paper underscores the importance of giving individuals the knowledge and context needed to evaluate these products based on their own goals and circumstances.
Life Insurance Adoption Gap: GoFundMe Should Not Be Plan A
While the annuity adoption gap dominates retirement income discussions, a parallel gap exists in life insurance. Abbie Rodriguez, senior vice president of the individual segment at TruStage, highlighted this problem in a June 2026 commentary for ThinkAdvisor. She pointed out that when famous actors died earlier this year, friends and supporters made headlines by organizing GoFundMe campaigns to pay for ongoing living expenses and child care costs for the actors’ survivors. The campaigns sparked a public backlash, but investigations revealed that the impact of lengthy illnesses had drained the affected families’ resources.
The financial impact of a loved one’s death is substantial. The National Funeral Directors Association estimates the average funeral costs nearly $8,000, and according to the US Bureau of Labor Statistics, funeral expenses have consistently increased faster than overall consumer prices. At a time when a large share of US adults report they cannot cover an unexpected expense of $400 to $1,000, that cost can have long-term impacts. The Federal Reserve explicitly notes that the unexpected expenses that often arise from illness or death force families into debt.
The Cost Perception Problem
According to LIMRA’s 2025 Insurance Barometer Study, 41% of adults say they are only somewhat, or not at all, knowledgeable about life insurance. Even more striking, even the healthiest adults overestimate the cost of life insurance by seven to 12 times the actual price. A policy that actually costs $25 to $30 per month is falsely assumed to cost as much as $360 per month. This perception gap is a huge barrier for Americans whose budgets are already stretched.
Rodriguez outlined three actionable steps the industry should take. First, turn education into action with proactive, milestone-based outreach — triggering life insurance conversations at key moments like marriage, home purchase, or the birth of a child. Second, meet people where they are with flexible products and payment options, including lower-face-amount term policies and convenient premium modes. Third, simplify the buying journey with clear quoting and streamlined underwriting, showing prices early and offering fast digital paths for eligible customers.
Average Funeral Costs vs. Household Financial Preparedness
| Financial Metric | Amount / Statistic | Source |
|---|---|---|
| Average funeral cost | ~$8,000 | National Funeral Directors Association |
| Share of adults unable to cover $400 emergency | Significant share of US adults | Federal Reserve |
| Adults not knowledgeable about life insurance | 41% | LIMRA 2025 Insurance Barometer Study |
| Cost overestimate ratio | 7x to 12x actual price | LIMRA 2025 Insurance Barometer Study |
| Actual monthly cost (healthy adult, term) | $25-$30 | LIMRA industry data |
| Perceived monthly cost | Up to $360 | LIMRA consumer survey |
Why This Matters to Policyholders
For consumers, these three developments converge on a clear message: the retirement income and life insurance products that provide financial protection exist, are selling at record volumes, and are more affordable than most people think. Yet behavioural barriers — loss aversion, decision paralysis, longevity misestimation, and cost perception gaps — continue to prevent the people who need these products from buying them. The result is that millions of Americans arrive at retirement without guaranteed income, and millions of families turn to crowdfunding after a loss instead of having a policy in place.
The bipartisan House resolution introduced by Rep. Zach Nunn (R-Iowa) and Rep. Brittany Pettersen (D-Colo.) calls on federal, state, and local entities to observe June as National Annuity Awareness Month and encourages savers to seek professional guidance on lifetime-income planning. This is a signal that the retirement income gap is gaining recognition beyond the insurance industry itself, and that policymakers are beginning to acknowledge the scale of the problem.
Key Takeaways: Closing the Adoption Gap
- Annuity sales remain strong but adoption is uneven: Q1 2026 sales hit $107.4 billion, yet behavioural barriers — not lack of awareness — are the primary obstacle to broader adoption.
- Education alone is not the answer: New NBER research shows that financially literate consumers are not significantly more likely to buy annuities, because product complexity and emotional responses to mortality decisions persist regardless of knowledge level.
- Life insurance cost perception is wildly off: Consumers overestimate life insurance costs by 7-12x, thinking a $25-$30/month policy costs up to $360/month.
- Crowdfunding is not a financial plan: Relying on GoFundMe after a loved one’s death carries no guarantee of meeting goals or timing, making proactive life insurance coverage essential.
- Advisors play a critical role: Both the NBER research and LIMRA’s analysis point to advisors as key intermediaries who can help households navigate product complexity, evaluate tradeoffs, and make informed decisions.
Top Annuity Issuers Compared
| Carrier | Headquarters | Key Strength | AM Best Rating |
|---|---|---|---|
| Corebridge Financial (AIG) | New York, NY | Broad annuity product line | A |
| Lincoln Financial | Radnor, PA | Variable annuity leader | A+ |
| Pacific Life | Omaha, NE | Fixed indexed annuities | A+ |
| Prudential Financial | Newark, NJ | Registered index-linked annuities | A+ |
| New York Life | New York, NY | Immediate income annuities | A++ |
| MassMutual | Springfield, MA | Deferred income annuities | A++ |
How to Take Action
If you are approaching retirement or evaluating your family’s financial protection, the research points to several practical steps. First, do not assume annuities or life insurance are too expensive — the data shows that most people dramatically overestimate costs. Second, work with a licensed advisor who can help you evaluate the tradeoffs between liquidity and guaranteed income, longevity protection and flexibility, and the range of strategies available. Third, consider partial allocation rather than an all-or-nothing approach: even a modest annuity allocation or a $10,000 final expense policy can provide meaningful financial security.
- Assess your retirement income gap: Calculate how much guaranteed monthly income you will need beyond Social Security and any pension, then determine whether an annuity allocation can fill that gap.
- Get a life insurance quote: Use an online quoting tool to see actual prices — you may find that a term life policy costs far less than you assumed. Even a small final expense policy provides more certainty than relying on crowdfunding.
- Consult a licensed advisor: Both the NBER research and LIMRA’s analysis highlight the role of advisors in navigating product complexity. Look for a fiduciary advisor who can explain tradeoffs without steering you toward a specific product.
- Start small if needed: A $10,000 burial insurance policy or a partial annuity allocation is better than no coverage at all. You can always increase coverage as your financial situation improves.
If you are comparing annuities to life insurance for your situation, our life insurance vs annuity comparison guide breaks down the differences in detail. For retirement-specific planning, our life insurance for retirees guide covers the key decisions for those approaching or in retirement. And if final expense coverage is what you need, our final expense insurance guide explains how a small whole life policy can cover funeral costs and protect your family from financial strain.
Frequently Asked Questions
Why are annuity sales at record levels if adoption is still low?
Record annuity sales reflect the large number of Americans reaching retirement age — the “Peak 65” demographic wave — combined with demand for guaranteed income in an uncertain rate environment. However, adoption remains low relative to the total retirement income need because behavioural barriers such as loss aversion, decision paralysis around complex products, and underestimation of longevity risk prevent many consumers from purchasing, even when they would benefit from the coverage.
Does more financial education increase annuity purchases?
According to new NBER research by Jeffrey R. Brown, financial literacy alone does not significantly increase annuity purchasing rates. While literacy helps individuals engage with complex choices, it does not eliminate cognitive limits, learning constraints, or emotional responses to mortality-related decisions. The research suggests that simplifying product choices and offering trial periods may be more effective than additional education alone.
How much does life insurance actually cost per month?
According to LIMRA’s 2025 Insurance Barometer Study, a healthy adult can typically get term life insurance for $25 to $30 per month. However, the same study found that consumers overestimate the cost by 7 to 12 times, believing the same coverage costs up to $360 per month. This perception gap is one of the primary barriers to life insurance adoption.
Is GoFundMe a viable alternative to life insurance?
No. While crowdfunding platforms can help families raise money after a loss, there is no guarantee that a campaign will meet its goal or that funds will be available when needed. GoFundMe campaigns depend on the organizer’s social network and public visibility, making them unreliable as a primary financial plan. Life insurance provides a guaranteed death benefit that does not depend on donations or social media reach.
What is the difference between an annuity and life insurance?
Life insurance provides a death benefit to beneficiaries when the insured person dies, protecting dependents from financial loss. An annuity provides guaranteed income during retirement, protecting the annuitant from outliving their savings. Both are insurance products, but they serve different purposes: life insurance protects against dying too soon, while annuities protect against living too long. Our complete annuity vs life insurance comparison covers the differences in detail.
What should I do if I cannot afford a large life insurance policy?
You do not need a large policy to get meaningful protection. A $10,000 final expense or burial insurance policy can cover funeral costs and immediate expenses, and typically costs far less than a traditional term life policy. Many insurers offer flexible payment options including weekly or biweekly premiums. The key is to get some coverage in place rather than waiting until you can afford an ideal policy.
Related Resources
- AM Best Insurance Ratings — Check the financial strength ratings of annuity and life insurance carriers before purchasing.
- NAIC Consumer Resources — State-by-state consumer guides and regulatory information from the National Association of Insurance Commissioners.
- Social Security Administration — Retirement benefit estimates and longevity planning tools for Social Security recipients.
If you are planning for retirement or evaluating your family’s financial protection, it helps to understand the broader landscape. Our whole life insurance guide covers how permanent policies build cash value over time, our burial insurance vs term life comparison breaks down the tradeoffs for final expense coverage, and our life insurance vs 401k analysis helps you decide where to allocate your premium dollars for maximum long-term benefit.
Ready to protect your family’s financial future? Get a free life insurance quote today and see how affordable coverage can be — you may be surprised at how little it actually costs compared to what you think.
