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Bryn Mawr, PA, December 5, 2005 - American consumers are expected to more than double the sales of existing tax-deferred annuities they hold in 2006, as the economy moves into what appears to be a transition phase in which liquidity will be valued over illiquid holdings, according to J.G. Wentworth. As a result, the company said, sales by consumers of existing annuities are likely to hit a three-year high next year even as the annuities market itself continues to grow. "Based on the public data we've seen as well as proprietary information from agents and brokers active in this market, 2006 is likely to be a watershed year for sales by consumers of annuities they purchased, often in very different economic environments," said Michael B. Vaughan, managing director of the J.G. Wentworth Annuity Purchase Program™. "There are, according to industry estimates, more than $1.6 trillion of assets backing annuities in the U.S. alone. We estimate that 5-10%, or $80-160 billion, of those annuities are in the hands of consumers who would sell, in any given year, if they could." Vaughan pointed to the following five factors as supporting J.G. Wentworth's assumptions:
-- Liquidity matters in a changing economy. Consumer confidence, and optimism about more liquid investments like stocks and real estate, remains high.
-- Investment needs change. Changes in investment strategy or goals, or even just life changes like illness or divorce, often force hard reviews of existing assets and investment decisions. Unexpected medical problems can also be a factor.
-- Buyer's remorse is real. In fact, according to a 2003 survey of immediate annuity owners by the American Council of Life Insurers (ACLI), more than a quarter of respondents (27%) were "concerned they may be unable to sell their annuity if they want the money for something else" and 4% believe the decision to purchase an annuity was a poor one.
-- Annuity ownership can complicate estate planning and wealth transfer. The inheritance of an annuity, where there is significant divergence between the financial objectives of the original annuitant and the heir, can create issues.
-- Even the "experts" don't advise annuity ownership for all. The Motley Fool, a leading personal finance media company, said, "Annuities by and large: are too expensive, offer mediocre insurance coverage, restrict the owner's investment choices to so-so, ho-hum, quasi-mutual fund subaccounts...and lack liquidity." Vaughan added, "Tax-deferred annuities have been a valuable personal finance tool for many consumers and offer the benefits of stable, secure and guaranteed income.
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 J.G. Wentworth J.G. Wentworth, the sponsor of the Annuity Purchase Program™, is the nation's oldest, largest and most respected buyer of annuities. For more than 14 years, J. G. Wentworth has been purchasing annuities as well as other deferred payment streams. During this time, the company has purchased over $2 billion of future payment obligations. The company's annuity-backed notes are rated AAA by Standard & Poor's and AAA by Moody's and sold to institutional investors. J.G. Wentworth is based in Bryn Mawr, PA. For more information about J.G. Wentworth and the Annuity Purchase Program, go to www.jgwfunding.com/annuities.asp. # # #
About the author:
This article submitted by DMi Partners, the itneractive marketing agency representing JG Wentworth.
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