How to Sell Your Annuity Payments

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Annuities can help you plan for your future and ensure you have a steady income later on in life. Along with retirement planning, your annuity can also help you with your current financial obligations. If you are experiencing financial challenges or have other reasons for needing cash now rather than later, you may want to consider selling your annuity payments. Learn the benefits of selling an annuity and what the selling process looks like.

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What Is an Annuity?

An annuity is a financial contract between you and an insurance company that you can use to keep a constant stream of income later on in your life. Many people use annuities for their retirement planning so they can continue to receive an income after they are done working. Lottery winners may also choose to receive their winnings as an annuity. This means that rather than getting their winnings all at once, they get installments of their winnings over many years.

Although annuities are intended to help people distribute their funds over a long period of time, you may experience times in life when you need short-term financial solutions. In these situations, you may be able to sell your entire annuity or a selected portion of it. These immediate funds can help you cover unplanned costs and recover financially so you can start planning for retirement once again.

The Benefits of Selling Your Annuity

Rather than waiting for your annuity payments in the future, you can sell your annuity payment to get cash right away. Here are some reasons this can be beneficial for you:

  • Inflation: With inflation, the purchasing power of your annuity amount may decrease over time. It may be more worthwhile to get the money now and put it toward your current expenses.
  • Education: You may need your annuity funds now to pay for children’s or your own education, which can come at a large cost. By using your annuity to cover college expenses now, you may also avoid paying high-interest rates on student loans.
  • Debt: Along with student debt, you may have other outstanding debt with high-interest rates. Selling your annuity for cash now may save you money since you can pay these debts sooner.
  • Unexpected circumstances: A death in the family, sudden injury or illness, unexpected job loss, or divorce can be quite expensive. Selling your annuity can help you stay on top of the financial obligations that come with life’s unexpected circumstances, such a funeral expenses, medical bills, and lawyer fees.
  • Life changes: Perhaps you or one of your children is getting married, or you are planning to move. Selling your annuity can help you cover wedding expenses and moving costs.
  • Home expenses: Whether you’re doing renovations, buying a new home, or repairing unexpected damage to your house, you may be in need of extra money sooner than you anticipated.
  • Inherited annuity: After a loved one passes away, you may inherit their annuity. You can choose to sell it to cover funeral expenses or other expenses related to their death.
  • Invest elsewhere: You could use this money to invest in the stock market, increase your earnings, and save for future expenses like retirement.

Options for Selling Your Annuity

If you decide you want to sell your annuity payment for an immediate lump sum of cash, there are a few different ways you can do it.

  • Partial Annuity Sale: You can choose to sell your annuity payments for a set period of time. After this time is over, you can resume receiving your annuity payments as stated in your contract. Basically, with this type of sale, you are pausing your annuity payments for a set amount of time in exchange for immediate cash.
  • Lump-Sum Sale: With a lump-sum sale, you are choosing to receive an exact dollar amount of your annuity immediately. For example, if you need $10,000 now, you could do a lump-sum sale of that portion of benefits. Then, you can receive the rest of your annuity as it is outlined in the contract with the insurance company.
  • Entirety Sale: This option is when you sell what remains of your contract. You receive the entire value of your remaining annuity in a one-time payment. After you receive this payment, you will not receive any future annuity payments from your insurance company. Instead, the company that purchased your annuity collects the payments.

How to Sell an Annuity

If you decide to sell your annuity for cash, there are a few steps you need to take to make it a legitimate sale. Start this legal process by talking to your financial advisor or attorney about your different options. They can help you determine what option you should choose when selling your annuity.

Next, you need to connect with a company that purchases annuities. Once you choose a company, you work with one of their representatives to discuss your sale options. They work with you to gather information about your annuity and then offer you a quote to buy it. Think about the offer and determine if it is right for your financial situation.

Once you decide on a quote, the representative drafts up a contract for you to read over and sign. Most states require court approval before honoring this contract. Schedule a court date to discuss this transaction.

During this hearing, you may need to explain why you need to sell your annuity. For example, the judge may ask you about your current state of finances and why you need cash right now. Make sure to have your reasons prepared before this hearing. If the judge approves your request, the transaction is forwarded to your insurance company and you can receive payment.

Before selling your annuity, make sure it’s the right financial decision for you. Getting cash sooner than later can have many benefits for you and your family. Get started on researching your options and reaching out to a representative who can help you through the process.

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