"The significant improvement in net sales indicates the third quarter drop in gross sales may be a function of reduced exchange activity rather than a slowing of new investment," said Frank O'Connor, product manager, Morningstar Annuity Research Center, in a statement. "The lion's share of positive cash flow is concentrated in variable annuities offering income guarantees, which reflects continued demand for these types of products among investors in or near retirement."

Third quarter variable annuity total sales dipped 4.9 percent to $36.3 billion from $38.2 billion in the second quarter of 2012, according to Morningstar. Year over year, variable annuity total sales decreased 7.2 percent from $39.1 billion in the third quarter of 2011. Despite the decline, variable annuity net sales for the quarter increased by 44.3 percent to $5.8 billion from $4 billion during the second quarter.

Within the variable annuity market, there were $24.5 billion in qualified sales and $11.8 billion in non-qualified sales during the third quarter. Variable annuity total net assets reached a new all-time high of $1.62 trillion during the third quarter of 2012, up about four percent from $1.56 trillion in the second quarter.

Total fixed annuity sales for the third quarter were down 3.1 percent to $16.6 billion from $17.1 billion in the second quarter of 2012. Year over year, fixed annuity sales decreased 12.8 percent from $19 billion in the third quarter of 2011. For the fixed annuity market, there were nearly $8.6 billion in qualified sales and $8.0 billion in non-qualified sales during the third quarter. 

"Despite, or perhaps because of low interest rates to some extent, income annuity sales are growing and indexed annuities are holding their own," Beacon Research president Jeremy Alexander said.

"Income annuity payouts look attractive relative to the conservative alternatives. That's especially true for deferred income annuities, which provided most of the sequential increase in total income annuity sales. Indexed annuity premium bonuses and guaranteed lifetime withdrawal benefits also look pretty good in the current low rate environment."

Overall, the IRI suggests that a renewed focus on income-related annuities is directly attributable to consumer demand for a rock-solid guaranteed stream of retirement income, especially after continued stock market fluctuation and continued economic uncertainty.

"The renewed attention to income annuities stems in part from a report issued last year by the U.S. Government Accountability Office, concluding that annuity ownership offers predictable income that can reduce the uncertainty that comes along with managing investments and drawing down assets," said Cathy Weatherford, IRI president and CEO. 

"I believe this quest for certainty is helping to keep industry-wide sales relatively steady, despite the current low interest rate environment."