The purpose of an annuity may be to provide steady income during retirement, but there are certain circumstances that may arise which will create the need to sell an annuity for a lump sum payment. Some people choose to find a buyer for their annuity so that they can buy a home, create an emergency cash fund, or invest in a business. Regardless of the reason, there are certain factors that should be considered and steps that need to be taken in order to sell an annuity to the right buyer. At Lump-Sum-Buyouts.com, you can sell your annuity at the right price.
Determine if Your Annuity is Transferable
It is first necessary to determine whether or not your annuity is transferable. If it is not transferable, you will not be able to sell it for any reason. The only way to use a non-transferable annuity for cash is to use it as an asset to be approved for a standard bank loan.
If the annuity is transferable, you need to know if it is a structured annuity or not. Many states conform to the Structured Settlement Protection Act, which requires the approval of a state court in order to sell a structured annuity. This may be cumbersome, but the measure is only meant to protect your best interests.
Calculate the Value of An Annuity
Before searching for buyers for your annuity, you need to determine its resale value. Your initial investment may be tax deferrable, but any distributions are considered taxable items, so this should be taken into consideration. Annuities are rather complex legal documents. Therefore, you need to be aware of the details to get the best price possible when you sell an annuity.
Finding a Buyer When You Sell An Annuity
When in search of a buyer for your annuity, you can ask your insurance company for recommendations or you can perform an Internet search for well-respected and reputable companies. There are numerous websites that offer to buy annuities, and you can use their free quote form to receive approximate price quotes. However, you should be aware that you will likely not receive the amount you are quoted and the quote may not include the fees that will be deducted at the completion of the transaction. There are many companies out there looking to pay you the lowest price possible. For this reason, you should only do business with a reputable company, like Lump-Sum Buyouts, who will provide you with the best possible price for your annuity and not keep any fees hidden from you.
When selling anything, let alone an annuity worth thousands or hundreds of thousands of dollars, you should entertain multiple offers. You can easily sell an annuity yourself without incurring any fees, but if the details of the annuity are unclear to you or you do not feel completely comfortable with the process, you can hire a broker to facilitate the transaction. You may have to pay a brokerage fee, which can be a substantial amount, but they will also be able to negotiate the most competitive price for your annuity.
You also need to understand that you will not receive the full value of your annuity, regardless of the company you sell it to and whether you use a broker or not. The company that will purchase your annuity will be doing so as an investment, not as an act of charity. As such, they will review the details of your annuity and decide if it will be a profitable investment for them.
Investigate Your Funding Options Before You Sell An Annuity
When selling an annuity, you also need to understand all of the ways in which annuity buyouts are performed. A straight purchase is obviously the most simple. With a straight purchase, which is the purchase method of choice for Lump-Sum Buyout, the buyer will provide you with a lump-sum payment in full for your annuity.
A partial purchase is another option. With a partial purchase, the buyer will purchase all of your immediate annuity payments over the next three to five years. At the end of this period, you will be able to receive your annuity payments as scheduled once again. This option will provide you with instant cash flow and still leave you with retirement funding.
A reverse purchase can also be used to sell certain years of your annuity. For example, if you are currently receiving $1,500 per month over the next 20 years, you can choose to sell your payments for only years five through ten. By doing so, you will receive a lump sum for the payments made through those years and you will still be able to receive your current payments up to and after that time period.
The final option is a split purchase. Split purchases offer you the ability to sell a partial amount of your monthly payments so that you can still have regular cash flow coming in. If you have a $2,000 per month annuity payment and you only need $1,000 per month, you can receive a lump sum for the portion of your monthly payments that you do not need.