Articles for Financial Advisors

Variable Annuities Offering Buybacks

Variable Annuities Offering Buybacks

A number of issuers of variable annuities with living benefit riders—including Hartford, AEGON, AXA, and Transamerica—are making offers to buy back some contracts from contract owners. The possible short-term losses to the insurers are expected to be more than offset by their long-term savings. 

In general, some VA issuers are offering contract owners their cash value plus an additional amount. These insurers want to eliminate lifetime payment liabilities for a certain percentage of their contracts. Advisors should understand that such buyouts are not usually in the best interest of a contract owner. Moreover, any type of full redemption could easily trigger a tax event; gains and “buyout bonuses” are taxed as ordinary income if the contract redemption exceeds the original cost basis.

Previous Post

For Advisors by Advisors. Browse all Programs.