With Annuities, Knowledge Is Power

Financial advisor discussing about life insurance and domestic finances with young couple in living room at home.

Two important takeaways from the 2025 Insurance Barometer Study released last month by Life Happens and LIMRA are that:

1. Consumers have a woeful knowledge gap when it comes to understanding life insurance and life insurance-related products, and

2. Having enough money for a comfortable retirement is the leading financial concern for both Gen X and Millennials.

While the Barometer Study focuses primarily on traditional life insurance products, its results have meaningful implications for other financial protection products, including annuities. Other top financial worries identified in the research include paying for long-term care services, maintaining a steady income, and being able to cover monthly bills. For many people, annuities are important parts of comprehensive financial plans that address these and other concerns .

Annuities aren’t right for everyone, but for a large and growing segment of consumers they check a lot of boxes. They can provide steady and guaranteed lifetime income, offer certain tax advantages, cover routine and extraordinary living expenses, and create peace of mind. In fact, studies show that annuity owners are more confident in their retirement financial security. They are less likely to be swayed by market volatility and more likely to stick to their established financial plans.

A persistent problem consumers have with annuities is that, similar to life insurance, they simply don’t know enough about them. Annuities can be complex and there is a great deal of misinformation online originating from some financial “gurus.”

A survey earlier this year by Equitable found that about 90% of adults believe a financial product offering lifetime income would be valuable, yet fewer than half indicated that they understand how annuity products work. Similarly, the Insurance Barometer Study shows only 29% of consumers say they are very or extremely knowledgeable about life insurance. It also found broad disparities between perceptions and reality when it comes to the pricing and underwriting process for life insurance products.

Fortunately, experienced and ethical professionals, like those who are members of the National Association of Insurance and Financial Advisors (NAIFA), are a great resource that can help shrink this knowledge gap. They understand when an annuity does or does not fit a client’s financial plan and what type of annuity might meet specific financial goals. For many consumers, insurance and financial professionals can provide an important source of financial education and, when equipped with annuity product offerings, help alleviate concerns about running out of money in retirement.