SELL ANNUITY PAYMENT
Why Should I Sell My Annuity Payments?
SELL ANNUITY PAYMENT
Whether you are thinking of buying a house, starting a small business or paying student loans,
using a portion of your future annuity or structured settlement payments can help you get back in control of your finances. When you face a serious need, accessing your annuity can be better than putting your life on hold.
Here are some common reasons people to sell their annuity payments:
SELL ANNUITY PAYMENT
Effects of InflationInvesting in YourselfRetirement FundsPaying off debtMarket ConditionsUnexpected Life EventsBuying or repairing a homeStarting or investing in a businessFunding a college educationDivorcingInvesting (property, stocks, retirement fund)Liquidating a long-term investment, such as a seller-financed private mortgage noteUnexpectedly unemployedTravelling or vacationingSustaining an injuryFunding an endowment or scholarshipAssisting friends or family in financial needProviding funeral expensesMovingLiquidating an inherited annuityExperiencing buyer’s remorse
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What Are My Options for Selling My Payments?
Depending on your reason for selling, you may need access to a specific amount of money at a specific time. There are several types of buyouts that can suit your financial needs. The three most common are entirety, lump sum and partial buyouts.
Partial
Partial buyouts, or selling a portion of your payments, still guarantees you’ll receive periodic income without losing the tax benefits. In the event you need immediate cash for a certain period of time, you can sell payments in exchange for a lump sum. For example, if you need to pay for a new car, you can sell years 1 – 4 of your annuity payments for a lump sum. After the four years have passed, periodic payments will resume.SELL ANNUITY PAYMENT
The structured settlement will continue to carry those tax benefits and extend them to your heirs in case you die before collecting all your payments. In the event you need access to cash a second — or third — time around, you can buyout another portion of your remaining payments for a lump sum.
Entirety
Choosing to sell your structured settlement for the full term of the contract liquidates your entire investment, ending any chance of periodic income payments in the future. However, you’ll have access to the lump-sum payoff.
Lump Sum
Selling lump sums over time also provides immediate income in large increments. But this option still guarantees a steady flow of income from your structured settlement for the remainder of the contract, while still carrying the same tax benefits as before. For example, if you need $25,000 for a down payment on a home, you can sell that amount specifically instead of a certain number of payments that may not add up to the exact amount you need.
Similar to a partial sale, you as the annuity owner can opt to sell a portion of your annuity payments in exchange for a lump sum. Selling in lump sums allows you to be more specific on the amount you receive, which would then be deducted from your future payments. Visit our Payment Selling Options page for additional options, including information on the following topics:
Selling Part of Your PaymentsCashing Out Your Annuity in FullPre-Settlement FundingSelling a Mortgage Note
How Much Will I Receive for Selling Annuity Payments?
Selling an annuity is a business deal. Companies that buy structured settlements (called factoring companies) intend to profit from their purchases. This means you’ll be offered less than the total worth of your annuity for a cash buyout. The discounted purchase amount is the price you are paying for the ability to tap into your money immediately.
The difference between what your annuity is worth and what you’ll receive in cash is a called a discount rate. Both the buyer and the seller have a role in negotiating this percentage. The average discount rate is 12%.
There are many factors that can influence the amount of your discount rate, including:
Total value of payments you are sellingHow many payments you are sellingDates the payments will arriveCurrent economic conditionsInterest rates set by the Federal ReserveFees and extra charges
In rare cases, you could receive as little as 50 percent of the value of your structured settlement. Most offers come in at 60 – 80 percent of the original value. For this reason, we advise people to hold on to as many future payments as they can. We also recommend shopping around for the best quote before choosing which company to work with.
Getting Financial Advice
Although it may cost you a little bit of money, sound advice from your lawyer or financial analyst may save you thousands of dollars during the selling process. Your advisors can warn you about a poor valuation of your structured settlement or save you money in taxes.
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