You can sell your annuity or structured settlement payments for cash now. In case your financial needs have changed recently, selling the rights to these payments in trade for a lump-sum payout from an organization that specializes in buying annuities can provide you some financial flexibility. Annuities can be bought from portions or in entirety.
What Are My Options for Selling My Payments?
Once you decide how much money you need, you can opt to sell the whole value of the annuity, a portion of the total value for a lump sum, or a specific area of a specific number of payments.
Option 1: Sell My Annuity in Its Entirety
Selling the full value of your annuity contract liquidates the asset. This eliminates all future income payments. However, you’ll get access to the full amount you agreed to with the buyer.
Option 2: Sell Some of My Future Annuity Payments in a Partial Sale
If you decide to sell only a portion of your repayments, you’ll still receive periodic income and wthhold the tax benefits. In the event you may need immediate cash, you can sell some payments in exchange for a lump sum. One example is, you can sell years one through four of your annuity payments for a lump amount. After the four years have passed, periodic payments will resume.
Option 3: Sell a Dollar Amount of My Annuity Payments for a Lump Sum
Similar to a partial sale, a lump-sum sales allows the annuity owner to sell some of their annuity payments in exchange for a lump sum. This means they get a specific dollar amount, which will be deducted from future annuity or structured settlement payments. Visit this website to get more insight Sell structured annuity payment
How Will I Benefit From Selling My Annuity?
Selling your annuity can be a suitable option that you should gain liquid cash and financial versatility if your preferences change.
Having direct access to your funds makes it possible for anyone to pay off debt, put a down payment toward a new home purchase, replace a broken vehicle or cover any other immediate financial need. No matter your reason to market, having the overall flexibility to use your money can help reduce your financial stress.
Selling all or some of your own future annuity payments may also be less expensive than choosing a 401(k) loan or IRA withdrawal. Be sure to consult with your financial advisor to compare options for your cashflow.
How Much Will I Receive for Selling Annuity Payments?
Selling an annuity is a small business deal. Factoring companies plan to profit from their purchases. This means you’ll be offered significantly less than the complete worth of your annuity.
Account for the Discount Rate
The difference between what your annuity will probably be worth and what you’ll receive in cash is named a discount rate. According to various reports, the average discount rate ranges from 9 percent to 18 percent. And it’s not unusual to face even higher percentages.
The discount is essentially the tradeoff for the capability to make use of your money immediately. It can also offset the purchasing company’s administrative costs and lost earnings.
Understand Present Value
The present value of your annuity is the full total cash value of future payments after factoring in the discount rate.
A lower discount rate means a higher present value, and vice versa. For example, you should keep more of your money if one purchasing company offers a ten percent discount rate compared with 14 percent from another company.
Factors that can influence your discount rate include:
- Total value of payments for sale
- Number of payments being sold
- Payment arrival dates
- Economic conditions
- Interest rates set by the Federal Reserve
- Fees and charges
Some factoring companies may charge higher discount rates and fees than others, resulting in the annuity owner acquiring less of the contract’s value. This is why, it’s important so that you can be savvy about your sale also to consider several quotes.
Consult with a Professional Before You Accept an Offer
Although it may cost you a little bit of money, sound advice from your legal professional or financial planner may save you 1000s of dollars during the selling process.
Your advisor can warn you about a low-ball offer or save you profit taxes.
They can also clear up confusion about the process or clarify misleading terminology, such as the fictional “structured settlement loan” that some companies use when referring to the sale of payments.
Annuity Sales Versus Structured Settlement Sales
Annuity sales don’t need court approval. In the event that you purchased or inherited an annuity, the selling can be an agreement between you, the buyer and the insurance company. The whole process takes roughly a month. You can plan for the sale with our answers to the frequently asked questions specific to the transaction.
In contrast to selling annuities purchased through insurance firms, selling the rights to structured settlement payments is a legal process that will require court approval.
Offering another layer of protection for sellers, Structured Settlement Protection Acts – the state and federal laws that safeguard the rights of settlement holders – govern the practices of buying companies.