Everything That You Need to Know Before Selling Annuity

Financial decisions are some of the most challenging decisions in the lives of the people and yet they are the ones that keep coming up. Insurance policies, annuities, loans, etc. are all forms of financial transactions that you execute in life. One of the most challenging decisions can be to sell an annuity. Annuity is the product you purchase in which you get a yearly payment from the insurance company you have chosen. Of course, the size of your annuity depends on the size of your pension pot. If you are considering selling annuity right now, here are the most important details you should know.

Important Things to Know While Selling Annuity

It Is Completely Legal

So, you buy annuity from your pension pot so it is your personal income. When you think about selling this income to someone else, the idea is not very comforting. A lot of people are under the impression that selling annuity is not a legal process so they never talk about it or even consider it as an option. What they do not realize is that selling their annuity is just as legal as purchasing an insurance cover. It is a legal process in which you have to involve a judge. You cannot complete the process without the permission of a judge to which you have to submit all the necessary documents of the deal.

What you have to know about the process of selling annuity is that it can take up to two months for you to complete it. During this process, you will require proper permission from the court to hand over your annuity to the buyer. If someone suggests that you sell them your annuity without proper legal work, you should stay away from them.

You Do Not Have to Sell It Entirely

It can be an extremely bold step to sell your annuity to someone once and for all. You have to know that reversing this process is not easily possible or possible at all. You have to plan your route properly to make the most out of selling annuity. First, you often consider selling your annuity only when you need cash urgently. You can do the calculation to know how much money you need and how many annuity payments will cover that expense. If only a few annuity payments can cover your expense, you don’t have to sell your annuity in its entirety.

Yes, it is very much possible selling annuity in half or in a size that you think will serve your needs. So, the amount that you want to sell will go to the buyer in exchange of a lump sum payment. The other part will still be yours and will begin on a later date just like before i.e. you will start getting payments yearly.

You Will Not Get the Full Price

It is extremely important to realize at this point that you will not get the exact value of your annuity when you sell it. Of course, you are selling annuity because you need instant cash in hand. The buyer who agrees to give you that cash is not going to give you the exact value because then the buyer can get it from a bank him/herself. More importantly, the buyer is not a person but usually a company that buys and sells annuities from and t individuals. In order for this company to buy annuity from you and sell it to another individual at a profit, it has to play with some margins.

You will have to offer some discount to the buyer which has to be big enough to let the buyer sell the annuity to another person with profit. There are no other significant fees involved in the process other than this. You will, however, have to do some negotiation so you don’t end up offering too much to the buyer.

You Should Involve a Financial Advisor

At this point, it should be clear to you that there is a long process involved in selling annuity. At the same time, you have to make sure that you get the right value for the annuity that you are selling. Just because the buyer has to manage his/her profit margins does not mean you have to end up with a loss. You are the one taking the big risk here because you are selling something that belongs to you and you are the one who will lose some value in the return that you will get. To ensure that you are dealing with the right people and that you get maximum value out of the transaction, you should have a financial advisor with you right from the start of the process.

You Can Transfer the Money in an Account

A lot of the times, people reach the decision of selling annuity because they can see a huge investment opportunity. In that case, you don’t really want the money in hand but rather want it transferred to your investment account. It is totally possible to have the money you receive for selling annuity right in your investment account. In fact, you don’t even have to pay any taxes on this money because you never touched it with your hands. However, it is again highly advisable for you to get in touch with a professional financial expert who will tell you which option is the best and the safest for you.

Bottom Line

Any confusing thoughts in your mind about selling annuity should be clear by now. If you think selling annuity solves a problem for you, do not hold back from taking this step. It is a completely legal process that takes place every day around the country. You can find some great annuity buyers on the internet right from the comfort of your home. However, it is highly recommended that you involve a financial expert right from the beginning to avoid any mishaps. It is a complex transaction that you don’t do every day, so a professional can be extremely useful throughout the process.