An annuity is one of the most viable ways to invest and get regular disbursements especially deferred annuity that you can request to payout at a future pre-determined date like after retirement. It will give you a steady source of income when you stop receiving a salary. The idea to buy annuities is to continue receiving long-term disbursements. But when your financial situation changes you may start to think: I want to sell my annuity. Do I have options? Who will buy it? What’s the process like?
Yes, you can sell annuity payments and get cash if your financial needs increase to the point that annuity no longer meets your needs. You can sell current payments with immediate assistance or future payments for a deferred annuity. You receive lump sum cash in both instances.
Three Options to Sell Annuity
You can retain the annuity worth the amount of money you need in the future and sell the remaining value of your annuity. You can sell a portion of the total value or a specific portion of your annuity.
Here are the main options to sell an annuity.
Partial annuity sale
A partial sale means you sell payments from your annuity for a specific period. You will receive periodic payment when the period ends. For instance, you can sell payments for a year and leave a stipend covering you for life intact. You will receive periodic income like before when the one-year period ends.
The advantage of partial annuity sales is that you will not permanently sacrifice annuity payments. You only put them on hold and exchange the future payments for immediate cash. The cash helps you to handle the current financial needs, and you will still get money from your annuity by the time you retire.
A lump sum is almost the same as a partial sale as you will still get payments from your annuity in the future. The difference is that a lump sum sale involves selling a lump sum of your entitled annuity payout. For instance, if you need $100,000, you can make a lump-sum sale of benefits worth this amount.
A lump-sum option gives more control over the amount of cash you receive and the payout from the annuity. The payout you receive from partial annuity sale depends on the number of relinquished payments, which can be less. A lump-sum option assigns the exact amount you want to get in cash.
An entirety annuity sale means you will give up the remaining interest in your annuity contract. You will get all the money you should get from your contract at once. There will be no future payments. It is a simple way to sell annuity because you will not negotiate a partial payment term or lump sum.
All the above options are worth your consideration. The most appropriate depends on your cash needs. For instance, you can choose the entirety sale if you have enough savings for your retirement. A partial or lump sum would be a better option if you started to save late. Both options allow you to maintain an annuity that will become an income stream when you retire.
What is the process to sell annuity?
An annuity sale is a legal process that requires the seller to follow specific steps. Sometimes it requires approval from a judge if the sale is likely to affect other parties.
You could sell your annuity legally without a judge’s approval if you did not acquire your annuity contract through a lawsuit settlement. However, you require approval from the court to execute the sale of structured settlements.
The role of a judge in annuity transactions is to ensure that the sale of your settlement payments is in your best interest. The court also provides that annuity sales will not cause financial difficulty to you and your family. You can find a buyer once the court approves the sale of your annuity.
It is wise to consult a financial advisor before finding a buyer. Financial advisors will perform an evaluation and inform you of the impact of selling annuity payments on your economic interests. Research on the settlement companies is also crucial because you will determine those that give more value to annuities.