2-minute article

Making sense of the RILA revolution

With sales topping $24 billion in 2020, registered index-linked annuity (RILA) sales have maintained a 38 percent compound annual growth rate since they were introduced nearly a decade ago.* What’s behind the popularity of this relatively new product? Discover the “why” behind the fastest growing annuity category in our industry today.

The evolution of an industry
The financial industry continues to evolve to meet the ever-changing demands of consumers. When fixed indexed annuities (FIAs) were introduced in the mid 90s, they filled in a rather large gap in the annuity risk spectrum, answering the call for growth potential beyond a simple fixed rate of return while providing guaranteed protection from loss due to market downturns. RILAs were the next logical step. RILAs hit the market in 2010 and have been steadily building momentum by addressing the growing demand for stronger accumulation potential with managed market risk.

Innovation with purpose
Also referred to as buffered annuities, structured annuities or indexed variable annuities, RILAs are viewed as a cross between a fixed indexed annuity (FIA) and a variable annuity (VA). While the majority of FIAs are designed with income in mind, RILAs are built for growth. In fact, out of all the annuities available today, RILAs offer the highest accumulation potential of any risk-managed annuity product.

RILAs manage risk with buffers or floors, tools that provide investors the opportunity to pursue growth potential based on their individual tolerance for risk. In exchange for taking on some market risk, clients can experience greater growth potential in the form of cap and participation rates generally higher than FIAs — making RILAs an attractive solution for accumulation-oriented investors and a viable alternative to VAs.

“RILAs have bridged the gap between FIAs and VAs,” shares Grant Kvalheim, President of Athene. “They’re a great solution for clients in need of a financial product that can promote asset growth while providing a level of protection from volatile markets.”

While RILA specifications vary, these competitive participation rates may outperform in different scenarios. Get the case study that shows the difference this may make in periods of market volatility.

Weathering the storm and coming out on top
As it turns out, RILAs happen to be in the right place at the right time. With the global pandemic, increased market volatility and persistently low interest rates, today’s economic conditions have created a “perfect storm,” contributing to the increased market share RILAs have experienced in recent years over other annuity types.

Faced with today’s challenges, consumers may be more likely to seek risk-managed products to help protect what they’ve gained combined with strong accumulation potential to maintain asset growth. These lingering fears and feelings of uncertainty have created an opportunity for change, accelerating the need for RILAs in the marketplace and furthering a shift toward accumulation in the annuity industry.

According to Kvalheim, “RILAs are a timely and innovative solution that addresses the evolving needs of today’s investor in an increasingly complex planning environment.”

Tips to help narrow the field
With RILA sales booming, carriers continue to jockey for position by offering new products in hopes of capturing their piece of the pie. But with such stiff competition, it can be hard to determine the best fit for your client. It’s important for you to analyze each product and carrier with a critical eye before offering a RILA — especially in light of the new DOL fiduciary and best interest rules.  

This information is brought to you by Athene — where innovative annuity solutions and unique interest crediting strategies are powered by unconventional thinking.


* LIMRA Secure Retirement Institute, “U.S. Individual Annuities: 2020 Year in Review.”

Registered index-linked annuities have a risk of substantial loss of principal and related earnings. They are designed to be a long-term investment product used to help provide income for retirement and are not suitable as a short-term investment.