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