Licensed security brokers sell variable annuities, and fees and expenses are included.

Variable annuity sales are headed for their lowest annual sales in nearly two decades, since the mid-’90s, as their multi-year slide continues.  Broker-dealers have been running from the current trend in “transparency” of products and are now turning to products with stronger guarantees: fixed indexed annuities. (FIA)

Sales of variable annuities are down some 25-30% over 2015, partially because of changes in the Department of Labor’s fiduciary rule. New disclosure rules are due to start in June 2017. These new rules force companies that sell variable annuities to become more transparent and disclose their inherently high fee structure.  Variable annuity sales are also down due to insurers putting volatility controls on contracts with “guaranteed income riders,” diluting their upside potential.

On the other hand, fixed indexed products continue their rapid climb to satisfy most of the conditions consumers demand these days, such as little or no up-front fees, long-term guarantees, competitive rates of return, the ability to change investment options, no ongoing fees, the “no loss of principal” concept, and the contractual feature of not being able to outlive their money.  Fixed-indexed annuities offer clients a favorable alternative to their fixed-income portfolios, often better than bonds and bank products.

LIMRA (Life Insurance Marketing and Research) projects fixed indexed annual sales to reach $75 billion in 2017, a gain of over 20% from the previous year. LIMRA also predicts a possible 20% decrease in the sale of variable annuities.  Variable annuities are the lowest in sales since 1998.

The future appears bright for the fixed indexed side and very blurry for variable annuities.

Variable annuities are considered securities and are sold by security salespeople.

Fixed-indexed annuities are insurance products sold by licensed insurance agents.