The confidence of AIG's structured settlement annuity policy holders has been shaken, but should these policy holders sell the rights to their annuity payments?

Due to the circumstances surrounding the recent events of AIG's financial difficulties the media has spawned a frenzy among policy holders. This author believes annuitants should be cautious about selling the rights to their annuity payments. Here is why:

• Annuitants are guaranteed $100,000 of the present value of the annuity contract (most states) by their state guaranty fund. Click here for a chart of Life Insurance State Guaranty Laws & Provisions
• As seen in the Executive Life of New York impairment, annuitants received 100% of their payments
• At this current time, annuitants selling the rights to their AIG annuity will receive higher rates than normal due to the uncertain future of the company.

Comments:

What is the rate that the present value of an annuity is calculated at? Most likely the Guaranty Association will decide this if ever needed.

What is the future for AIG?

The Fed now has a major role in AIG's operations -- it essentially named a new chief executive, Edward Liddy, and owns nearly 80 percent of the company's stock.

The government is widely expected to sell off AIG's assets to get its money back, rather than aggressively pursue new business, because the United States' main priority is to get its money back, rather than to maximize profit for shareholders.

Will AIG's life and annuity division be sold off? We will wait and see.