Can Annuities Be Used As Collateral?

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   Steve Savant

   Syndicated Financial Columnist, Host of the weekly talk show Steve Savant's Money, the Name of the Game, Scottsdale Arizona

   Non-qualified tax deferred annuities are personal property, i.e. assets with economic value and some liquidity. Many banking institutions permit tax deferred annuities as collateral for loans to their customers. But keep in mind, if the collateralized annuity is liquidated by the bank to satisfy the loan, the event may trigger ordinary income taxes on the policy gain and may incur surrender charges.

   Answered on September 4, 2013

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