Recent data suggests a growing number of U.S. consumers are discovering annuities as part of their retirement financial planning. Underwritten annuities, also known as enhanced annuities, represent nearly half of individual annuity sales in the UK and could help expand the U.S. market.
Retirement in the U.S. is often seen as a Lucky Charms moment. After decades of toil, employees reach the end of the worker-bee rainbow to find a pot of gold waiting for them in their golden years.
At least, that is how it is supposed to work.
Reality is far different for a growing number of Americans today. Modern medicine has helped push U.S. lifespans far beyond those of previous generations. That is good news.
Less good are the proliferating struggles of retirees who have outlived their savings.
This comes as even newer medical innovations – GLP-1s and better earlier cancer detection, for example – are poised to make the retirement-savings situation even more challenging. Greater longevity is good, but it creates a looming financial concern if systemic and behavioral changes don’t match to ensure gold remains in the pot at the end of the rainbow of longer lives.
Thankfully, there is a solution, and recent data suggests Americans are starting to find it: guaranteed lifetime income from annuities.
A March 2026 LIMRA report showed total U.S. annuity sales rose 7% to $464.1 billion in 2025, marking nine consecutive quarters above $100 billion.1 However, much of that growth reflects accumulation-focused products, underscoring a persistent gap between saving through annuities and using them to generate guaranteed retirement income.
Significant room for growth remains, and an approach proven in the UK offers a path forward.
To understand the opportunity, it helps to look at the UK market in the late 1990s and early 2000s. At the time, many retirees effectively had to convert pension savings into annuity income, resulting in roughly 400,000 annuities written each year on about £12 billion of pension assets.
But the landscape shifted. In 2015, the UK government announced pension freedoms that provided new options for those reaching retirement. No longer were people forced to purchase an annuity. Among other options, they could take their entire pension pot as cash – 25% of it being tax-free. They could also leave pension funds alone and prolong the decision.
As expected, the demand for annuities plummeted.
These new freedoms came just before a substantial jump in interest rates collided with some high-profile stories of people who took lump-sum payments and ran out of money long before the need disappeared. Safe, guaranteed income from annuities started to look attractive again.
The individual annuity market grew by 46% year-over-year in 2023 to a post-pension freedoms record of £5.2 billion. That swelled to £7 billion in 2024 and £7.4 billion in 2025.
Equally important, the average amount invested in 2025 surpassed £80,000 for the first time.2
At the foundation of this annuity resurgence is a variation common in the UK that is, at best, niche in the U.S. – the underwritten annuity.
Underwritten annuities – often referred to as enhanced annuities – accounted for approximately 48% of total individual annuity sales in the UK from 2024 to 2025. This was up from 38% versus six years before.3
There are no delineated statistics for enhanced annuities in the U.S., precisely because they represent such a tiny fraction of the overall market. But a convergence of forces makes the U.S. market ripe for insurers to partner with experts in the enhanced annuities space to grow this offering, including:
Three key advantages make a compelling case for enhanced annuities in the U.S.
Current U.S. annuity pricing is based on a healthy annuitant pool. The assumption is that anyone buying an annuity expects to live a long time.
This belies reality. A healthy 65-year-old may be expected to live to nearly 90 years old, while the life expectancy for a 65-year-old with known medical conditions may be more than 10 years shorter. In a market without enhanced annuities, both those 65-year-olds would receive the same benefit.
In effect, those with chronic conditions subsidize healthier retirees; they pay the same premium but are likely to receive fewer total payments.
Enhanced annuities allow for risk-based pricing, ensuring that retirees with shorter life expectancies receive higher monthly payouts – often 20%-50% more in established markets such as the UK.
The aging U.S. population is steamrolling toward greater long-term care (LTC) needs while long-term care insurance (LTCI) sales have plummeted. LTCI has a significant barrier to entry as it must be purchased while the applicant is healthy and less likely to be thinking about later-life insurance needs.
Enhanced annuities provide a last-chance mechanism to address this challenge. They can be bought after an applicant’s health begins to deteriorate – and they incentivize accurate disclosure of existing ailments. If true end-of-life long-term care needs arise, enhanced annuities can act as immediate-needs annuities, converting into a guaranteed high-income stream specifically to pay for nursing home or assisted living costs with built-in longevity coverage post-recovery.
A recent RGA behavioral science study revealed that many retirees avoid annuities because they believe they will lose money if they die early. Enhanced annuities enable insurers to attract a broader demographic of retirees who previously viewed annuities as a bad deal.
In addition, by incentivizing disclosure for the clients’ benefit, enhanced annuities create a transparent environment in which insurers can price risk more accurately – and an environment that might assist honesty in the traditional life insurance business. The key is to find a partner with deep biometric expertise.
The disclosure incentive reveals a challenge, however. RGA research has demonstrated that the “honesty about health issues is financially smarter” message has not reached most consumers, even in the more mature UK market.
In a recent RGA behavioral science study, UK-based 50+-year-olds correctly answered, on average, only half of the questions on a comprehension test about a fictional but realistic individual annuity product. This includes a question about whether a person who reports excellent health or poor health would receive a higher payment.
If low comprehension is a significant barrier to uptake in the UK, the challenge for early enhanced-annuity entries in the U.S. market will be that much harder. Yet that same RGA study reveals paths to ease the journey and showcases the power of partnership in innovation.
A one-time pot of gold at the end of a career rainbow can prove risky for many retirees, even in the most ideal environment – and the emerging U.S. retiree environment is far from ideal. For many, the true lucky charm may be one that includes at least a portion of guaranteed lifetime income.
Now is the time for U.S. insurers to innovate, using the UK model to grow the enhanced annuities market. The key is to find a partner with deep experience with these products, vast underwriting experience, and matching behavioral insights to turn an innovation risk into a competitive advantage.
RGA has been in the enhanced annuities space in the UK for more than a decade and has longstanding relationships with the key players. In addition, RGA’s behavioral science team has recently completed research on how best to position annuities for consumer adoption.
Contact us today to explore an innovative partnership to capitalize on this opportunity.
