While deferred annuities can be appropriate investments for those seeking tax deferral, they are also among the most illiquid investments available. Once the initial 'free-look' period has expired, annuity owners are locked into the contract for the duration of the term, which can be many years, or else pay a surrender charge to liquidate. Some would argue that even your home's equity is now easier and less expensive to tap into than many annuities. You should look into current annuities quotes to sell your annuity if unhappy.
Of course, most contracts do permit a certain amount to be withdrawn each year without penalty (usually 10% of the accumulated value). But until recently, if you purchased any type of fixed or indexed annuity, then you could not liquidate the balance of your investment before the term expired without paying a penalty, except under certain circumstances. Immediate annuities do not even offer this exit; once they begin paying, they cannot be surrendered for value. However, even these annuities can be sold to a third party and getting competitive annuities quotes may be a worthwhile exercise if you need your funds.
The lack of annuity liquidity has changed, thanks to an emerging secondary market for annuities and the availability of annuities quotes from third parties. This fledgling market allows annuity owners to establish a price for their contracts and sell them to other investors in an arm's length transaction. Selling your annuity in this manner will prevent you from having to pay early withdrawal fees or other penalties that would be assessed by the issuing annuity company. Annuities quotes are an ever increasing resource that should be investigated. Annuity agents are those who can get you quotes.
Another advantage of the active secondary market is the ability to get annuities quotes for just part of your annuity. For example, if you hypothetically own a fixed annuity that pays $3,000 per month, and your monthly expenses are only $1,000 per month, then you could sell the $2000 per month difference to an independent buyer. Annuities quotes will vary widely from buyer to buyer so get several bids.
Finally, make certain that you understand the tax ramifications of your sale. This type of annuity sales transaction will result in capital gains tax, and must be weighed against the consequences of keeping the contract. However, if you have estate tax issues, then an annuity sale can be used to convert some or all of your current income stream into cash. The sale proceeds can then be invested in other types of investments that allow for a step-up in basis at death.
If you would like to know more about how you can sell all or part of your annuity contract in the secondary market, contact a local annuity agent for secondary market annuities quotes. Annuities quotes can really help you with making investment decisions regarding the annuity you already own.