Registered index-linked annuities are getting the attention of financial services companies, and with good reason.

Registered index-linked annuities (RILAs) have been the only bright spot in the annuities space for several years. During the height of the pandemic, RILAs surged while many other products slumped. Third-quarter sales last year jumped 33% to $6.4 billion, according to the Secure Retirement Institute, marking it the 23rd consecutive quarter-over-quarter growth for RILAs. The year-to-date sales reached $15.8 billion, up 26% from 2019 results.

While total annuity sales rebounded in a big way in the second quarter of this year to a record $68.2 billion, a 40% increase from last year, it was the growth of RILAs that once again stood out. Sales in the second quarter topped $10 billion, an increase of 121% over a year earlier.

In the first half of 2021, sales for these products were $19.2 billion, up 104% from the previous year.

Preliminary third-quarter results are showing another strong finish for RILAs. SRI reported sales of $9.2 billion, up 47% from third quarter 2020. For the first three quarters of 2021, RILA sales were $28.4 billion, 81% higher than prior year.

So it is little wonder why companies like CUNA Mutual Group are pushing RILAs, a product that is somewhere between a fixed-income annuity and a variable annuity. “RILA is the real star in the annuity space right now and it really make sense because at their core the RILA products provide the end customer the downside protection that they want with upside protection they need,” said David Hanzlik, vice president of annuity and retirement solutions at CUNA Mutual Group.

“The ability to provide the downside protection is important to people that are using these solutions, but that upside potential has been what’s captured everyone’s attention,” he said.

Hanzlik said CUNA Mutual Group launched RILAs in 2013, the third company to enter the space. He said until the last couple of years, there were only four companies in the marketplace. Today, he said, there are about 12 companies, and more are looking to bring RILA to the market in the next six to 12 months.

CUNA Mutual Group has been successful in the RILA space because it focuses on simplicity, he said. The company also was one of the first to launch the RILA with a guaranteed living withdrawal benefit, Hanzlik said. In terms of sales, he said their RILA offering with income is up 200% year-over-year.

Hanzlik, however, acknowledges that RILAs are underutilized by financial advisors. For those not yet on board, Hanzlik said it is just a matter of not knowing much about the product. “It takes a while for the word to get around,” he said, noting that RILAs have only been in the marketplace for about 12 years. But Hanzlik said once wholesalers educate advisors about RILAs, advisors will find the products to be great solutions to help their customers.

Hanzlik also pointed out that we are in a bull market and a lot of attention is still being focused on upside potential. “Clearly there has been a perception of complexity there, and that’s why we focus on simplicity and why we have gotten a lot of great feedback around our offering,” he said.

RILAs generally are flexible, Hanzlik explained, and although we are in a bull market, we are now in a low-interest rate environment, which causes more uncertainty.  “When you have a 12-year bull market, that certainly drives more stress and concern around how to protect retirement,” he said.

Hanzlik said advisors are focusing more on risk management. RILAs, he said, are a great risk management tool for customers, and that is another reason why there has been tremendous growth in the space, he said.

Last month, Jackson National Life Insurance Company debuted two RILAs. The Jackson Market Link Pro (JMLP), which is commission-based, and Jackson Market Link Pro Advisory (JMLPA), which is fee-based, offer consumers the opportunity to grow assets before and during retirement while offering different degrees of protection against unexpected market events, the company said.

Also, last week, DPL Financial Partners, a turnkey insurance platform for registered investment advisors, launched the Allianz Index Advantage Income Variable Annuity, a commission-free RILA that includes features to manage risk during accumulation and provides guaranteed income with a built-in income benefit rider.

Hanzlik said the RILA space is definitely attracting a lot of attention. He said there is a range of diverse types of products out there that provide flexibility. And they are seeing companies enter the space in alternative forms.

But at CUNA Mutual Group, the focus remains on simple to use and understand solution. “Our focus on simplicity, we think, will continue to differentiate us. Our RILA solution has been very straightforward and that’s the feedback we get from advisors,” he said.