Things You Must Know for Selling Annuity Payments
Annuity is basically a highly potent financial planning tool, which if used amid the right circumstances and for the right reason, is capable of offering extraordinary value to the purchaser. Individuals, who have the desire of having some hefty cash savings for retirement, are always advised to take steps that would make their investment portfolio more stable and secure. Annuities would help them do just that; but the thumb rule is that the more efficiently you will use your annuities, the brighter would be the future of the money you invest.
Annuities are categorized into two main types, immediate and deferred. Individuals who choose immediate annuity would start receiving payments immediately after making their first investment. For instance, you might choose this annuity type when getting ready to retire. Deferred annuity, on the other hand, would require you to invest your money for a specific period of time for you to start making withdrawals, usually in retirement. Annuity might also be fixed or variable.
The selling options you’ll have
You will come across a range of options when selling your annuities. The three of the most prominent ones among them are partial purchase, lump sum purchase, and full purchase. Partial purchase would let you sell a part of your annuity payment. This in turn would ensure that you get the amount of cash you are in need at the moment and also keep getting the annuity payments. Lump sum purchase, on the other hand, would allow you to sell a lump sum percentage of your annuity and get hefty cash value in return. A full purchase would mean that you are selling the entire annuity off, which would give you the opportunity of investing a big amount at once.
How should you sell your annuity?
You should always take advice from the settlement funding firm or broker you are working with when trying to sell your annuity. The representative of the firm you are dealing with for selling annuity payments may ask you a few questions regarding your annuity. You might also need to answer a few questions about your current financial situation; such questions help experts to determine the best way of assisting you in achieving your goals. Your financial status and goals are two of the main factors to be considered when deciding on the right selling option for you. Under certain circumstances, you might need to sell off all you payments, while on other occasions selling a certain percentage (which means you would keep receiving a payment regularly even after selling your annuity) would be the best option for you.
Your next job would be picking the procedure you would like to adopt for selling the future annuity payments. Based on all these information, your agent will complete the required paperwork and forward the details to the insurance provider managing your account. The firm will take some time to process all the changes and complete the sales procedure.
What are the common reasons of selling annuity payments?
The reasons for selling annuity payments might vary from one person to the other. Here are some of the common purposes for which people want to use annuity as a mode of income.
If an individual inherits an annuity, he or she might prefer receiving lump sum cash instead of receiving much smaller monthly payments.
Often people decide to sell their annuities off due to a life changing experience that force them to look for some immediate additional cash instead of several future payments.
People sell annuities when they decide making a modification to their estate planning or investment strategy.
You might look to sell your annuity if you suddenly find that the original reason for which you purchased it doesn’t apply to you anymore (due to changed circumstances).
Many opt for selling their annuities when they decide making their dream of setting up a business of their own or investing in someone else’s business a reality.
The cash obtained by selling annuities are often used as down payments of new homes or making home improvements.
There are people who sell their annuities for paying off debts acquired from medical bills, loans, or credit cards.
There are several instances when annuities have been sold for funding legal expenses needed for divorce.
Many sell their annuities off for investing in stock market or real estate.