Annuity sales just notched their tenth straight quarter above $100 billion, and variable annuities are riding the same wave. Traditional VA sales climbed 17% year over year to $17.2 billion in the first quarter, while registered index linked annuities, the hybrid product offering partial downside protection, grew even faster at 20% to $21.1 billion. The pitch is straightforward: market exposure plus a guarantee that income won't run dry, appealing to investors nervous about volatility but unwilling to give up growth entirely. That guarantee comes at a real cost though. Mortality and expense charges alone typically run 1% to 1.5% a year, and stacking on administrative fees, subaccount expenses and optional riders can push total costs north of 2% to 3.5% annually, a drag that compounds hard over a multi decade holding period. Regulators have taken notice too, with FINRA and the SEC both flagging VA sales practices and exchanges as active examination priorities in 2026.

Finsum: Variable annuities could make more sense in a rising rates environment.