How to Separate Annuity Fact From Fiction

Step right up, folks, and get your annuities!

US annuities have been ramping up the past few years, and the trendlines show no signs of slowing. The third quarter of the year saw over $126 billion in total sales, with the first nine months of the year bringing in $355 billion, or 2% more than that time frame in 2025, per a recent Limra report. But as annuity providers market their products to an ever-growing audience of aging retirement savers, it’s crucial to pay attention to the details on individual products. Some providers, for instance, advertise impressive growth figures available on products without acknowledging that every benefit comes with a cost, said Jonathan Barth, senior vice president of advisor and firm growth at DPL Financial Partners.

“There are only so many levers that you can pull when you’re building an insurance product,” Barth said. “Anytime you see [annuities marketing] a guarantee or a bonus or something like that, it’s always great for advisors and clients to ‘run it through AI.’ Question it.”

Call 1-800-Annuity

The term “hybrid annuity,” though widely used, is somewhat misleading because it implies a combination of the best features of fixed and variable annuities. In reality, they tend to be fixed index annuities with guaranteed income riders — something widely available. Similarly, some companies advertise high up-front bonuses — in so-called “bonus annuities” — while failing to mention that these tend not to credit interest as well in future years compared to the first. California’s Department of Insurance even put out a release encouraging investors to take caution when it comes to selecting annuities, pointing out how deceptive sales tactics like putting pressure on potential buyers can put retirees in particular at risk.

The need for due diligence is clear, as many advisors are just now learning about fee-based annuities, Barth said — particularly those who have made the move into the independent RIA space. “Advisors who [become] independent and leave the broker-dealer behind, they think they also have to leave annuities behind,” he said. “Now, more than 25 carriers have entered into this fee-based annuity space.”

On the Uptake? Retail sales are booming — they were up 7% last year from 2024 — but it’s also the area where misleading marketing is most common.

“There’s a ton of research you can do to educate yourself,” Barth said. “Talk to people who are unbiased and fiduciary advisors and [people] who act as fiduciaries to make sure that you completely understand, when you’re purchasing an annuity, what you’re using it for and what the trade-offs are.”