Ideally, an annuity is supposed to provide a steady flow of income in the sunset years. Different life situations, however, force many to sell part or their entire annuity for cash. Below we take a look at annuity and these life situations in detail. We will also look at the selling options available and outline the process involved in selling annuity payments
What is annuity?
An annuity is an insurance product. One is expected to save or deposit a certain amount of money with an insurance company. After a given period of time, the money saved will be paid out as a form of income. Unlike other forms of investments, this insurance product guarantees a steady flow of income that will come in handy in the future.
Annuities come in two basic types. There are immediate annuities and deferred annuities. As the name suggests, payments are given immediately you make your investment in the case of immediate annuities. For deferred annuities, your money is invested for a period of time and payments start at a later date.
The above types of annuities can either be variable or fixed. Fixed annuities attract a fixed amount of interest on your investment. The interest for variable annuities on the other hand varies and is dependent on the performance of the mutual fund you choose.
Why sell your annuity?
People sell their annuities for a variety of reasons. Generally, people only sell their annuity for cash if they need cash now to take care of different needs and their options are limited. It could be tuition fees for an expensive but equally good school or medical fees for an unforeseen ailment. People also sell their annuities if they have a change of heart where their investments are concerned. Whatever the case, people only sell their annuities if they need all or a portion of their money in the present as opposed to a later time. Unlike receiving steady but small payments over time, selling their annuities allows them to access a larger sum of money that can adequately cover their present needs.
How to sell annuity payments
The selling process starts when you get in touch with a factoring company like those recommended by Settle4cash.com. There are quite a number of companies available. You have to take your time and choose a company you feel will serve you best.
After identifying the company, a representative of the company will be assigned to help you decide what the right course of action is. During this step you will be required to make a decision on whether to sell a portion of your annuity or the entire value. Of course your decision will be dependent on the amount of money you need now and the entire annuity amount among other factors. The company representative can offer guidance on the option that is ideal for your case.
Once you have made a decision on the best annuity selling option, you will be required to fill out some paper work. You will also be required to present a copy of your annuity agreement and sign a contract allowing the company buying your annuity to complete the sale. These documents are sent to your insurance provider or the company issuing the annuity. Once this has been approved, you will receive the agreed amount in your account.
The process of selling annuity payments can be easy and complicated at the same time. If you have all the required documents, there is no reason why your insurer will deny you the chance to sell your payments for cash. That said all paperwork needs to be done right for the request to get approved.
Annuity Selling options
Depending on how much money you need among other factors you can decide to sell a part of your annuity or sell the entire annuity. If you prefer to do a partial sale you have to determine the amount you need. This will determine the amount of time you will have to go without a regular payment. During this time, the amount you would have received regularly will cover the lump sum you receive when you make a partial sale. After some time, your regular payments will resume and you will get the amount you had earlier agreed on with your insurer.
You may also choose to sell your annuity in its entirety. Where this is the case the money you get will mark the end of any payments you should have received in the future. This is because you will have sold your entire investment and therefore your insurer will not be making any regular payments in the future.
These are the key things you need to know about selling annuity payments. Take your time and decide whether this is the right step to take. After all, selling your annuity for cash is all about accessing the money you need now as opposed to waiting to get this money in bits or at a later time.