Annuity sales are on track for a record year. Here’s what to know before buying

cnbc.com:

Consumers pumped record money into annuities in 2023, on the back of higher interest rates and anxiety about the stock market and U.S. economy, experts said.

Americans have bought about $360 billion of annuities this year, according to an estimate by LIMRA, an insurance industry group.

That would handily beat last year's record — about $311 billion — which in turn had surpassed the prior mark set amid the 2008 financial crisis, according to LIMRA.

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Annuities are issued by insurance companies. Consumers generally hand over a lump sum of money in exchange for an income stream for life, similar to a pension or Social Security.

Financial planners sometimes recommend them to guard against the risk of outliving one's savings — though some kinds are much better at doing so than others, they said.

«There are all different types of annuities, and to me, the majority are not necessarily good,» said Carolyn McClanahan, a certified financial planner based in Jacksonville, Florida, and a member of CNBC's Advisor Council.

In 2023, the U.S. Federal Reserve raised its benchmark interest rate to the highest level in 22 years. That nudged up the returns and income that consumers could get from annuities, thereby making them more attractive, said Todd Giesing, head of annuity research at LIMRA.

While the stock market has bounced back from a dismal 2022, there's «still a lot of uneasiness with investors,» who are grappling with unknowns like the trajectory of inflation and the economy, Giesing said.

Such malaise