Facts + Statistics: Annuities

Annuities

Annuities play an important role in retirement planning by helping individuals guard against outliving their assets. In the most general sense, an annuity is an agreement for an entity (generally a life insurance company) to pay another entity a series of payments. While there are many types of annuities, key features can include tax savings, protection from creditors, investment options, lifetime income and benefits to heirs. 

Fixed and variable annuities

Among the most common annuities are fixed and variable. Fixed annuities guarantee the principal and a minimum rate of interest. Generally, interest credited and payments made from a fixed annuity are based on rates declared by the company, which can change only yearly. In contrast, variable annuity account values and payments are based on the performance of a separate investment portfolio, thus their value may fluctuate daily.

There is a variety of fixed annuities and variable annuities. One type of fixed annuity, the equity indexed annuity, contains features of fixed and variable annuities. It provides a base return, just as other fixed annuities do, but its value is also based on the performance of a specified stock index. The return can go higher if the index rises. The 2010 Dodd-Frank Act included language keeping equity indexed annuities under state insurance regulation. Variable annuities are subject to both state insurance regulation and federal securities regulation. Fixed annuities are not considered securities and are only subject to state insurance regulation.

Annuities can be deferred or immediate. Deferred annuities generally accumulate assets over a long period of time, with withdrawals taken as a single sum or as an income payment beginning at retirement. Immediate annuities allow purchasers to convert a lump sum payment into a stream of income that begins right away. Annuities can be written on an individual or group basis.

Annuities can be used to fund structured settlements, arrangements in which an injury victim in a lawsuit receives compensation in a number of tax-free payments over time, rather than as a lump sum.

Individual Annuity Considerations, 2015-2019 (1)

($ billions)

      Total
Year Variable Fixed Amount Percent change
from prior year
2015 $133.0 $102.7 $235.7 -0.5 %
2016 104.7 117.4 222.1 -5.8
2017 98.2 105.3 203.5 -8.4
2018 100.2 133.6 233.8 14.9
2019 101.9 139.8 241.7 3.4

(1) Based on LIMRA's estimates of the total annuity sales market. Includes some considerations (i.e. premiums) that though bought in group settings involve individual buying decisions.

Source: U.S. Individual Annuities, 4th Quarter 2019, LIMRA, 2020.

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  • Individual variable annuity sales in the United States rose 1.7 percent in 2019, after rising 2.0 percent the previous year. Fixed annuity sales grew 4.6 percent in 2019, after rising 26.9 percent in 2018.

Premiums by line

Measured by premiums written, annuities are the largest life/health product line, followed by life insurance and health insurance (also referred to in the industry as accident and health). Life insurance policies can be sold on an individual, or "ordinary," basis or to groups such as employees and associations. Accident and health insurance includes medical expense, disability income and long-term care. Other lines include credit life, which pays the balance of a loan if the borrower dies or becomes disabled, and industrial life, small policies whose premiums are generally collected by an agent on a weekly basis.

 

Sales Of Individual Annuities By Distribution Channels, 2015 And 2019

 

Source: U.S. Individual Annuities, 2019 Year in Review, LIMRA, 2020.

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Deferred Annuity Assets, 2010-2019

($ billions, end of year)

Source: U.S. Individual Annuities, 4th Quarter 2019, LIMRA, 2020.

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Individual Fixed Annuity Sales, 2015-2019 (1)

($ billions)

(1) Includes variable individual annuities sales which were less than $0.1 billion.
(2) Single premium contracts bought by property/casualty insurers to distribute awards in personal injury or wrongful death lawsuits over a period of time, rather than as lump sums.

Source: U.S. Individual Annuities, 2019 Year in Review, LIMRA, 2020.

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Top 10 Writers Of Group Annuities By Direct Premiums Written, 2019

($000)

Rank Group/company Direct premiums written Market share (1)
1 Voya Financial Inc.  $11,462,576 14.5%
2 TIAA 8,998,442 11.4
3 Prudential Financial Inc.  6,871,485 8.7
4 Athene Holding Ltd.  5,228,572 6.6
5 MetLife Inc.  4,834,403 6.1
6 Nationwide Mutual Group  4,512,953 5.7
7 Principal Financial Group Inc.  3,916,406 5.0
8 Great-West 3,902,623 4.9
9 Lincoln National Corp.  3,848,475 4.9
10 OneAmerica Financial Partners  3,552,190 4.5

(1) Based on U.S. total, includes territories.

Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute.

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Top 10 Writers Of Annuities By Direct Premiums Written, 2019 (1)

($000)

Rank Group/company Direct premiums written Market share (2)
1 American International Group (AIG) $19,849,362 6.7%
2 Jackson National Life Group  19,823,880 6.7
3 Lincoln National Corp.  18,820,181 6.4
4 Prudential Financial Inc.  16,033,502 5.4
5 Nationwide Mutual Group  15,601,991 5.3
6 TIAA 14,900,194 5.0
7 Allianz 12,506,864 4.2
8 Athene Holding Ltd.  12,187,991 4.1
9 New York Life Insurance Group  12,022,898 4.1
10 Equitable Holdings 11,947,681 4.0

(1) Includes individual and group annuities.
(2) Based on U.S. total, includes territories.

Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute.

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