What are Annuities?
An annuity is an investment product that can be tax deferred and is sold by insurance companies. For people wanting a secure future an annuity is a very good choice as an investment. The more common retirement plans such as the 401(k) and Roth IRA and Roth 401(k) while most widely used do in fact have some limitations with regard to an income ceiling, limitations on contributions and on withdrawals.
In comparison an annuity does not limit the amount of contributions you are able invest. There is not an income limitations nor is there compulsory withdrawals. An annuity is preferable therefore for someone who although contributing to their usual retirement plan are still looking for a regular periodic payment whether fixed or variable. A deferred annuity, which gives a constant flow of payments during retirement has proven to be the most desirable annuity.
Why Sell Annuity Payments?
The annuities you can sell may have been purchased by you or inherited from a family member. You may want some lump sum cash from a structured settlement from a personal injury case or other lawsuit such as medical malpractice. The reason for wanting to sell your annuity may be nothing more than the need for some immediate cash. Maybe you want to buy a new house, start a business or pay for the education of your children. Because of the deferral of taxes on annuities one might sell some or all of their annuities to avoid being placed in a higher tax bracket upon retirement. The lump sum cash for annuity payment option needs to be considered carefully.
How beneficial are annuities
An annuity should really be held for many years to get the most out of this type of investment. Buying an annuity a couple of years before retirement is not such a good investment and the benefits do not really outweigh the costs. Therefore one might consider selling their annuity and invest in products that produce a higher yield or return on their investment. People holding variable annuities may be wiser spending time managing investments in securities to gain a better return on their investment. The reason for this is that variable annuities do not guarantee a fixed stream of payment like fixed annuities do. The payments you’ll get from this type of investment will be based on your ability to assemble a good portfolio of securities.
So How do you sell your annuity?
Well first of all establish the value of the annuity. Figure out the discounted value of the annuity’s future cash flow in order to determine it’s current value. This ought to be the price that you get when you sell your annuity. If the market price of your annuity is less than it’s current value then you should not sell the annuity. Instead hold on to it until the market value is at a point where selling makes financial sense.
Decide whether to sell all or part of your annuity. A nice benefit that a secondary market for annuities has to offer is the opportunity to sell a part of your annuity payment and hold on to the remainder. As an example you could sell 1/3rd of your regular monthly annuity payment for certain number of years and get a lump sum amount while still getting your other 2/3rds every month.
Cash for annuity payment, finding the buyer
An established structured settlement company can figure out the value of your annuity. They will also lead you through the steps and documents needed to proceed to sell your annuity payments. These documents will include the annuity policy itself, copies of the annuity checks you have received, tax returns and various other documents. While there is obviously a fee for this service it will speed the process up and help you avoid mistakes that could cost you money.
If you find you cannot sell your annuity for the price you want, think about swapping your annuity payments for a more agreeable annuity. As an example you could swap your variable annuity payments for fixed payments using an annuity swap. It might also be possible for you to use your annuity as collateral for a loan if you are in need of some cash but is can’t sell annuity payments for a decent price.