The New Annuity Buyer: What Drives Purchase Decisions?

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Author

Matthew Drinkwater, Ph.D., FSRI, FLMI, AFSI, PCS
Corporate Vice President, Annuity and Retirement Income Research
LIMRA and LOMA

October 2026

The deferred annuity marketplace has changed dramatically over the past several years, posting record-breaking sales amid elevated interest rates, strong equity market performance and growing concerns about retirement security. As retirement risks become more difficult for consumers to navigate, comprehending the mindset of investors purchasing deferred annuities has become more critical than ever. Sustaining growth will require insurers and distributors to understand what buyers value most and how those preferences are evolving.

Against this backdrop, LIMRA recently surveyed over 1,400 investors who had purchased deferred annuities following a discussion with a financial professional (FP) within the previous three years. The findings reveal a more nuanced picture of today's annuity buyer than many in the industry may assume. While guaranteed income continues to play an important role, buyers are increasingly motivated by a broader set of objectives that includes principal protection, growth opportunities, retirement asset accumulation and professional guidance.

Protection and Returns

When asked about the factors that influenced their purchase decisions, deferred annuity buyers consistently identified three considerations as most important: protection of principal, the financial strength of the issuing company and the interest rate or projected return offered by the product (Figure 1). At least three-quarters of buyers rated each of these factors as "very important." Notably, these were the same top three decision factors identified in LIMRA's previous study of annuity buyers, suggesting motivational consistency despite substantial changes in economic conditions and product offerings.

Figure 1. The Importance of Annuity Purchase Decision Factors

Percentage of Respondents

Filter the data in this chart by clicking on a color bar in the chart legend.

Note: Based on 1,443 deferred annuity buyers (investors aged 45 to 75, with $100,000 or more in household investable assets, who purchased a deferred annuity following a discussion with an FP within the past three years). Multiple responses allowed. Not shown: “Other reasons” (specified by 3% of respondents).

The findings indicate that consumers are not evaluating annuities solely through an income lens. Rather, they are weighing risk and reward. Buyers want attractive returns, but they also want protection from market declines and confidence in the insurer behind the guarantees.

This balancing act is particularly visible in today's environment. Ongoing concerns about market volatility and retirement security have reinforced the value of principal protection, while elevated interest rates have increased the attractiveness of annuity products that can serve as key components of the fixed-return portion of an investment portfolio. Together, downside protection and growth potential have become central elements of the annuity value proposition, boosting demand for products like registered index-linked and fixed indexed annuities that offer varying degrees of both features.

The Advisor Is Central

One of the clearest findings from the study is the continuing importance of FPs in the annuity purchase process. More than two-thirds of buyers considered their advisor's recommendation to be very important, and 14% identified it as the single most important factor in their decision. Advisor recommendations ranked above every income-related factor.

The influence of advisors was particularly strong among older investors, retirees, individuals with lower household incomes and those who maintained established relationships with their FPs. These buyers may rely on trust built through years of interaction rather than solely on their own assessment of product features.

Many annuity buyers place substantial weight on trusted guidance, particularly when evaluating complex retirement income and risk management decisions. For industry leaders, these findings reinforce the ongoing importance of advisor education, sales support and planning tools. Product innovation matters, but so does helping FPs connect product features to client outcomes.

Buyers Value Different Benefits

The study also highlights the dangers of treating annuity buyers as a homogeneous group. For example:

Older buyers prioritized principal protection and insurer financial strength. For example, 84% of buyers aged 65 to 75 felt principal protection was “very important” compared with 67% of buyers aged 45 to 54. Younger buyers placed greater emphasis on guaranteed income features, liquidity and flexibility.
Wealthier buyers focused more on asset preservation, with 84% of investors with household investable assets of $1 million or more deeming protection of principal to be “very important” compared with 78% of investors with lower wealth levels. Less-wealthy buyers relied more heavily on advisor recommendations.

Product preferences further reflected these differing priorities. Fixed-rate deferred annuity buyers tended to emphasize interest rates and principal protection. Registered index-linked annuity buyers focused heavily on projected returns. Fixed indexed annuity buyers showed strong interest in downside protection, while traditional variable annuity buyers were more likely to value tax-deferral benefits and guaranteed income features.

These findings suggest that effective growth strategies require segmentation rather than one-size-fits-all messaging. The industry's challenge is not simply to communicate the value of annuities, but to communicate the specific value proposition that resonates with each consumer segment.

A Broader View

Perhaps the most important takeaway from the research is that today's annuity buyer is motivated by a combination of goals rather than a single objective. Consumers are seeking a combination of growth opportunities, principal protection, retirement income, tax advantages and professional guidance. The relative importance of each factor varies across individuals, but successful sales conversations appear to connect these aspirations with the capabilities of annuity products.

The findings also suggest that debates within the industry about whether annuities should be positioned primarily as income products or accumulation products may miss the point. Consumers do not appear to draw such sharp distinctions. Instead, they often view deferred annuities as versatile tools that address multiple retirement risks and objectives. Firms that position annuities as multidimensional retirement solutions, rather than emphasizing any one feature in isolation, may be best positioned to meet consumer needs and capitalize on future growth opportunities.

Conclusion

As retirement planning becomes increasingly complex and responsibility for retirement security and income sustainability continues to shift toward individuals, understanding this evolving buyer mindset will become even more important. Future growth of the deferred annuity market will depend on recognizing what buyers truly value and ensuring that products, advice and communications align with those priorities.

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