Results of the most recent Gallup survey of non-qualified annuity contract owners confirm that the segment of population buying such annuities is precisely the demographic presumed to be interested: generally people over 40 with annual household incomes under $75,000.
Using the income as a financial cushion in case they or their spouse live beyond their life expectancy; avoiding being a financial burden on their children; and ensuring a retirement income were cited by eight in 10 of those surveyed as intended uses for their contracts.
Seven in 10 owners bought their contract to provide for catastrophic illness or nursing-home care, or as financial protection against high inflation or poor performance by other investments.
Ninety-four percent of contract owners agree that maintaining the current tax treatment of annuities is a good way to encourage long-term savings, according to the survey. Ninety-one percent agree that non-qualified annuities are an effective vehicle with which to accrue retirement savings.
Thirty-four percent of contract holders are age 72 and older, according to the survey. This is up 10 percentage points from the same survey conducted in 1992 (24%), but down six percentage points from 1997 (40%).
A higher number of variable annuity contract owners were under age 50 when they bought their first annuity (53%) than those whose first annuity was fixed (41%).
The survey found that 90% of respondents still own the first annuity they bought, and only three in 10 owners have withdrawn or received money from an annuity they or their spouse still owns. Of these respondents, the average age at which they first withdrew or received funds is 62.
Slightly more women than men are owners of non-qualified annuity contracts. The survey found that women are more likely to buy fixed, non-qualified annuity contracts while men are more likely to buy variable, non-qualified annuity contracts.
The majority of owners are married; 21% are widowed; and 10% are single, according to the survey.