Generally, an annuity refers to an investment product that is sold by insurance companies and can be tax deferred. People obtain annuity payment for a number of different reasons. In some cases, an annuity is an amount given to someone when they win a settlement from an insurance company or when they win a large amount as a prize. It is a good investment option for those who want to have a secure future for themselves as well as their family.
An annuity payment does not limit the amount that you can contribute to your investment. Similarly, there are no income limitations or enforced withdrawals. These payments are preferable for someone who though contributes to their retirement plan, still wants to look for a regular period payment. Typically, a deferred annuity which can give a constant flow of payments during your requirement is considered the most desirable annuity so far. Some people however do not like their total money coming to them in bits and pieces hence they decide to sell annuity payment.
How Selling Annuity Payments Can be Beneficial
When you decide to sell your future payments, you will have to give up that income being deposited into your bank account on a monthly basis. Nonetheless, there can be various better uses of the money if you have it in a lump sum amount. For instance, if you sell annuity payment, you can pay a down-payment on a house or pay for your child’s college fees. At times, the main reason for selling your annuity may not be more than the need for some immediate cash. Maybe you want to start a business, buy a new house or pay for your child’s marriage. Since there is deferral of taxes on annuity payments, you might want to sell it to avoid higher taxes upon your retirement. In fact, there can be a variety of ways to make the money work for you after you decide to sell annuity payment, such as the following:
You Get a Lump Sum Amount
One of the biggest reasons why you should consider selling your annuity payment is the fact that it lets you get your money in one lump sum amount instead of getting them in installments. It frees you from waiting for all the money to come in small pieces and gets you the funds right away.
You Can Pay Off a Debt
You may wonder what you can do with all the money that you did not expect to get until later. The good news is that with a lump sum amount you can do many thing including paying off a debt, such as a car loan or house mortgage. This helps you have a great peace of mind since you will not have to worry about the debt any longer.
You Can Pay College Fee
You may want to sell annuity payment in order to put it away for your children’s college fee. Seeing that getting education in a college is getting a bit expensive, you can obtain a good amount by selling your annuity and use it for your children’s education in the future.
You Can Travel to Your Favorite Place
There may be a destination you have always desired to travel to but could not make it because of lack of funds. It might be visiting to Rome or enjoying a cruise around the world. If you have decided that you have to do something fun, sell annuity payment and enjoy your holidays with your family.
You Can Spend Retirement Days Worry-free
Lastly, you can sell annuity payment to put the money away for your retirement. Many people prefer to choose this option because they want to make sure that they can be taken care of in their old age with the money received as a result of annuity sale. Most importantly, knowing that your money is there to help you in your old age is something to put your mind at great peace.
Tips on How to Sell Annuity Payments
Ideally, you should hold an annuity for many years in order to get the most out of it. Purchasing an annuity merely a couple of years before your retirement is not a good choice because it won’t bring the benefits that can really outweigh the actual cost. Therefore, you might consider selling your annuity and invest in financial products that are able to generate higher yield on your investment.
So, how can you sell annuity payment? Here are some useful tips for your ease:
- The most important aspect to consider when selling your annuity is to keep your eyes open for yourself and your investments. Make sure you know the ins and outs of selling annuity payment before making a final decision. While you can get a lump sum amount, you will be compromising on your monthly income which may not be suitable in your particular case.
- Contact your attorney to see if your annuity can be sold and how it can affect you financially once sold. By knowing the potential implications of selling your annuity payment, you can better decide whether or not to sell annuity payment.
- Get quotes from different companies that buy annuity payments. Compare the quotes to find out that which company is offering you better price and decide accordingly.
- Establish the value of your annuity payments. You can find out the discounted value of the future cash flow of the annuity which will also help you determine its current value. If your annuity has a less market value than its current value, it won’t be wise to sell the annuity until the market value reaches a point where selling makes a sense.
Selling your future payment for one lump sum amount comes with endless possibilities as to what you can do with the money received. For many people, it is better to sell annuity payment instead of having to wait for years to obtain all the money in bits and pieces. The reasons listed above are just few examples of what make most people to sell annuity payment and avail its benefits. You may consider any other options to avail if you decide to take all the payments in one lump sum amount.