Midland National Defends Annuity Liquidity Options

The maturity date of the kind of annuity that Migliacci owned is the last date that a holder can annuitize, not the first date, and the kind of annuity Migliacci owned lets the holder choose between annuitizing as early as 12 months after the date of purchase or withdrawing up to 10% of the cash in the annuity per year penalty-free, Phillips says.

A holder of that type of annuity who believes he may have a short lifespan can choose a “life settlement option” that will pay out a guaranteed amount of income for a predetermined period, even if the holder dies, and then continue to generate payments for the rest of the holders life if the holder lives past the end of the guaranteed-payment period, Phillips says.

“The maturity date has nothing to do with how quickly someone can exercise liquidity options,” Phillips says.

One of the lawyers who helped file the Migliacci case, William Shernoff of Shernoff Bidart & Darras L.L.P., Claremont, Calif., says he continues to read the annuity contract differently.

Midland National lawyers are planning to meet with Migliaccis lawyers to discuss the terms of the annuity contract, Phillips says.

Reproduced from National Underwriter Edition, February 18, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.