Annuities are a major personal finance tool for consumers
looking to lower their tax profile and plan for retirement. But,
millions of people are selling annuities for liquidity options,
in order to make other financial decisions.
A recent press release issued by J.G. Wentworth stated that with
more than $1.6 trillion of assets are backed by annuities in the
U.S. alone.
Michael Vaughan, managing director of the J.G. Wentworth Annuity
Purchase Program ™ said, "Despite the enormous success and size
of the annuity market in the U.S., we estimate that 5-10% of
annuity owners would consider selling all or part of their
annuities under the right circumstances."
He attributed their reasons to everything from life changes to
tax efficiency, but says the common denominator for most
consumers is liquidity.
According to a recent study from the same company, consumers are
selling their annuities as they would any other investment, for
reasons ranging from real estate opportunities to starting a
business. Based on J.G. Wentworth's own customer experience,
here is a list of top 10 reasons consumers sold their annuities
in 2005.
Life policy alterations and buyer's remorse came in at numbers
nine and ten respectively, with career changes at number eight.
An unexpected expense, including medical expenses, was number
seven, and aiding a friend or relative was number six.
Inheritance of an annuity, where the heir has significantly
different financial objectives than the original annuitant, was
the number five reason for selling an annuity. Generating
additional income was the fourth most frequent reason, with
starting a business and buying a vacation home at numbers two
and three. Finally, the number one reason consumers sold their
annuities in 2005 was for tax efficient wealth transfer
planning.
Vaughan added that, "Tax deferred annuities have been a valuable
personal finance tool for many consumers and offer the benefits
of stable, secure and guaranteed income." He continued,
"Unfortunately, annuities can also become a very inflexible
solution for many consumers when they face the need to review
estate planning or investment goals, or simply realize that
their life circumstances have changed."
About the author:
Nina Nocciolino is a copywriter for
DMi
Partners, an interactive marketing firm specializing in
higher education, finance, real estate and retail. For more
information visit
J.G.Wentworth
