Sell Annuity

Are you strapped for cash and want to earn cash now?  If you have an annuity, than you will have the opportunity to sell annuity payments to a buyer.  Annuity payments come from various sources such as structured settlements, lottery earnings, trust funds, investments, and lawsuit winnings. 

Some of the reasons why people want to cash in their annuity are because they need immediate cash and want the ability to liquidate future earnings so that they can pay for current liabilities.  For example, some people might have considerable debt that they need to pay off.  Also, if someone was injured from an accident and cannot work, they might need a lump sum payment for other needs instead of waiting for small periodic payments.  If you do decide to receive an annuity settlement, you will receive a lump-sum payment and won’t have to wait years upon years to collect the entire amount of the annuity.  Another benefit of some companies is that you can sell only a portion of your annuity so that you can have immediate cash and keep future payments for yourself.  There are ways to cash out some of your annuity by selling a number of your future payments; this ensures that you have immediate cash to pay off bad credit card debt or to be able to pay for closing costs when refining a home loan. 

Another reason to sell off an annuity is because sometimes life simply isn’t long enough for you to benefit from your entire annuity.  For example, many senior citizens receive variable annuities and end up getting stuck with their investment.  In the past, there selling an annuity was not an option due to contract restrictions.  However, selling an annuity is an option now due to a secondary market and has made it easier for people to have multiple options for their investment.  Sometimes selling off your annuity is the best thing to do and sometimes keeping it as a long-term investment is a better option.  There are some factors that you will need to decide on before planning on selling an annuity. 

The first thing you will need to decide on is whether you actually need the money versus being able to wait and receiving steady income in the future.  Annuities for the most part, are very stable and will guarantee a steady income for a duration of time.  When mixed with other financial instruments, you will be bound to have a safe and sound retirement income.  However, if you want cash to reinvent in a financial instrument that can earn a higher yield, then perhaps selling your annuity for cash is a better option.  So what should you do to if you have decided that cashing out your annuity is the best decision? 

If you have a structured settlement and it’s through an insurance company, you might want to see if you can sell your structured settlement for cash.   However, make sure you are absolutely sure that you want to go this route as you could lose a considerable amount of money for cashing as there are usually fees for cashing in your annuity.  Before you receive your first payment from a structured settlement, make sure to talk with your insurance company beforehand as one immediate payment to you can cancel your cash-in option. 

Where can you find annuity buying companies?  First you will have to calculate the present or fair value of your annuity.  This can be done by talking with a financial advisor or an accountant.  Next, figure out your options in the secondary market and see what type of companies are out there.  A good company will be able to answer all of your questions and won’t give you the run around.  The next step is to determine whether you want to sell a portion of your annuity or all of it.  If you have a $10,000 per month annuity, then you could have the option of selling fifty percent of it and retaining the other half for future payments.  Let’s say you want to purchase a vehicle, but do not have the money for it.  You could sell a portion of your future payments so that you could purchase that new dream car that you’ve always wanted.

You will also want to consider tax implication as cashing in your annuity will mean a current tax liability on your return.  Therefore, you will be better off by retaining your payments and reducing your tax liability for the year.  Sometimes taxes will eat up nearly half of your annuity after cashing out and allowing the secondary market company to take out their portion.  If you do collect your annuity payments for a very long time, then you can defer the tax liability and allow your annuity to grow for future use.