October 23, 2025

Milliman: Certain VA annuity surrenders doubled from 2022 to 2024

Updated research from Milliman finds that surrender rates on variable annuities with guaranteed living withdrawal benefits more than doubled from 2022 to the end of 2024.

A global actuarial and consulting firm, Milliman recently released the results of its two ongoing Variable Annuity Industry Experience Studies, which analyze policyholder behavior across 23 companies spanning 17 years.

The studies also revealed that the rate at which GLWB contracts are starting their income during the 2023-24 calendar years is, on average, about 20% higher than in the previous two-year period.

“We’re seeing some behaviors unfold that that are in line with the idea that VA GLWBs might be replacing their business with an alternative outside of VA, though we don’t have direct data to definitively conclude this,” explained Ben Johnson, consultant with Milliman and co-author of the studies.

The two 2025 studies cover surrender behavior and partial withdrawals, focusing on income utilization for GLWB riders.

Study results reveal that average surrender rates have increased since 2022 for GLWB contracts and contracts without living benefits. Notably, surrender rates have increased even during periods when surrender charges apply, contrary to traditional expectations.

Additionally, GLWB contracts that are at-the-money or moderately in-the-money have experienced higher surrender rates than previously observed. These patterns likely reflect policyholders’ responses to higher interest rates and the growing appeal of alternative annuity product offerings in the current economic environment, Johnson noted.

Life insurers pay close attention to surrender rates and the related impact on their balance sheets.

Not impacted as much

Contracts that are “very deep in the money” are still showing very low surrenders, Johnson said. “They’re not really being impacted by this increasing surrender trend as much.”

“Some of our contacts in the industry have anecdotally supported the idea of contracts replacing with something like an FIA with GLWB,” he added. “The reason for that is FIAs have these really high premium bonuses right now, in excess of 20%. In the FIA space that’s being used and has been used to justify surrendering, making up those surrender charge penalties and getting better rates.”

Johnson acknowledged the different distribution channels, with VAs being a security and being sold by fiduciary advisors, while FIAs are distributed more widely through agents and independent marking organizations.

“There’s not this huge overlap of agents that might be, I would say, influencing contracts to move in that direction,” he said. “But I think that there’s observable relationships and trends in our surrender data that supports this replacement theory.”

Insurers need to closely track these evolving patterns to effectively understand policyholder risk, Johnson said.

Milliman’s studies also reveal that surrenders remain sensitive to “moneyness,” or the ratio of guarantee value to account value, across all guarantee types. Policyholder persistency is higher when the account value is lower relative to the guarantee value, though even deep in-the-money contracts with lifetime income benefits continue to experience some level of surrenders.

The studies incorporate sequential data from 23 companies totaling 110 million contract-years of exposure spanning January 2008 through December 2024.