Annuities are among the most controversial financial planning tools. These insurance products have a reputation for being sold to clients who may not need them, but there are several legitimate use cases for guaranteed income.
Aware of some problems with annuity sales, the National Association of Insurance Commissioners (NAIC), revised its Suitability in Annuity Transactions Model Regulation in 2020 to require insurance agents and carriers to act in a client’s best interest.
As of 2026, the rule has been widely adopted across the United States, and the NAIC continues to refine guidance to clarify how the best interest standard should be applied in practice.
Despite improvements to the regulatory framework, consumers and even many financial advisors struggle to balance the following pros and cons of annuities.
This post originally appeared at U.S. News & World Report.