Planning to sell your annuity payments, read this for valuable advice
Annuity – meaning, types
Annuity refers to a series of equal payments a person may receive from a certain investment. Annuities are considered an important source of steady income especially for persons who may be coming close to the retirement age. The income stream from an annuity can be given out monthly, annually, quarterly, or after some agreed regular payment period. The payments received are determined by many factors, the most important being the length of time you would prefer to receive the payment. There are two basic categories which annuity payments do fall under – deferred, and immediate. Under immediate annuity, you are entitled to receiving payments soon after making your initial investment. Under deferred annuity, your initial investment is allowed to accumulate for some time after which withdrawals are made possible, mostly when a person begins retirement.
Annuity selling options
Anytime you are considering selling annuity payments; it is important to have knowledge of the options you have regarding how you can sell them. There are generally two paths – partial, or entirety annuity sale. Your choice may be influenced by factors such as how urgently you need the cash, or how you view your future financial stability. Under entirety approach, the whole terms of your contract clear your settlement payments all at once. The outcome of this option means the end of any scheduled payments. However, you are left with a lump sum of cash which you can take anytime you see fit. Under the partial sale option, you only trade a portion of your total annuity stakes for cash. You can pick a period which you will not receive your annuity payments. However, any future recurring payment will resume to you once the agreed deferment period is up.
How to sell annuity payments
If your annuity no longer lives up to your investment strategies, or seriously in need of some cash, then that would be the ideal time to consider selling your annuity payments. The amount your request in exchange for your annuity determines whether the given investment gets to be profitable or not. The easiest and quickest way to dispose of your annuity payments is by working closely with a broker. For best returns, you should settle for the best bargain, and that means any value you quote must represent the value of your annuity stake. Buyers like those reviewed on Settle4Cash do make the paperwork aspect of annuity sales to be much easier – within a week or two; you can have the cash you requested ready, and use it to shape your financial outlook.
It is also important to consider some of the taxes and penalties that come into play if you are selling annuity payments. For instance, selling an annuity before the age of 59 can trigger off federal penalties and taxes, and this can eat much into what you are already expecting. It is therefore considered better to understand all the rules involved before getting ready to pick the cash from annuity payment sale. You may also want to consider the time value of money. For instance, something that cost $5 five years ago maybe selling at $7 currently, and getting the figures right may ensure that you protect the value of your annuity investment. Besides using brokers, you can sell terms of your annuity contracts at a personal level. If you are using this approach, it is better off if you compare the orders you receive from different persons, and only pick the one that guarantees to live up to your financial expectations.
Reasons for selling annuity
Though annuity is considered a long-term finance investment, it is one of those assets we can’t get stuck to throughout our lives. With annuities, you just need a good reason to sell them so that you can have a reasonable financial freedom. Disposing of your annuities just for the sake of it is considered a bad judgment that opens up the path to financial ruin in the future. If you have a debt obligation to satisfy, in need of some cash to buy a house, cover rising cost of an emergency bill, or approaching the retirement age and in need of some financial freedom, then it would be appropriate to convert some of your annuity holdings into cash.