Life and Annuities Forecast: What’s Ahead Through 2027?
Written by: Karen Terry , assistant vice president, Insurance Product Research, and Keith Golembiewski , assistant vice president, Director of Annuity Research, LIMRA
February 2025
Economic factors play a heavy role in life and annuity product sales trends. They impact not only overall growth but also determine the mix of products and which types of insurance and annuities are popular during a given period. The past few years have seen slow growth for individual life, following the COVID-19 public health emergency — although some life products have seen spectacular growth over the past few years. Contrast this with strong increases in the annuity market, driven by favorable short-term interest rates and a strong equity market.
Economic Factors
Economic predictions are difficult in general and become even more challenging during a period of policy change. Forecasting in the current environment is difficult, as the continuation of the trends we’ve seen — moderating inflation, interest rate cuts and stock market growth — depend heavily on future policy decisions by the incoming administration.
At this point, Moody’s economic forecast assumes that the status quo will continue. The consumer price index is expected to remain moderately low as inflation is forecast to remain around 2 percent, with a slight jump in 2026. This could change as proposed tariffs could restart inflation growth. That would impact interest rate trends, which have had a major impact on life and annuity trends.
The Federal Reserve cut interest rates in December again, but additional cuts in 2025 are in question, and higher inflation might lead to a pause or even increases. Consumer spending power isn’t expected to increase as household income levels are expected to increase at or slightly faster than inflation.
Noneconomic Factors
There are other noneconomic influences that will impact sales over the next few years.
Regarding individual life, consumer demand continues to soften from the heightened levels experienced during the peak of the COVID-19 pandemic. There are no major regulatory changes on the horizon for 2025. Currently, provisions of the Tax Cuts and Jobs Act are set to expire at the end of 2025, including deductions for pass-through entities and a return of the estate tax to prior levels. The incoming administration has discussed extending the cuts.
Demographic assumptions are a key influencer for annuity sales over the next few years. More than 4.1 million Americans ...
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Related:
Join our next LinkedIn Live episode of Industry Insights With Bryan Hodgens on February 25 at 2 p.m. ET: How Intermediaries Help Financial Professionals Grow Their Practice
Register to attend the 2025 Life Insurance and Annuity Conference March 31 - April 2.