An annuity is a very popular financial instrument, used everyday by more and more people. It can mostly be explained as an insurance product. The annuity starts generating an income, after the beneficiary reaches the retirement age. This is a very productive strategy, especially for those who want a steady income, once they retire. The payments are fixed and can be received at a predetermined date, once a month, quarterly or annually. In rare cases, the beneficiary can receive the whole amount, as a lump sum payment. The annuities fall into 2 main categories: immediate and deferred. If you opt for an immediate annuity plan, you will start receiving the payments soon after your initial investment. If you choose a deferred annuity, the money will accumulate in your investment fund. The cash from the account can be transformed in an immediate annuity, as soon as the holder wants to receive the payments.
Can I sell my annuity?
Many people decide to sell their annuity for cash at a certain point. This practice is very common and it can happen for different reasons. Some holders decide to sell their annuity in order to receive the full amount of money at once. Still, depending on your financial needs, you could choose to sell the whole annuity or just a part of it. If you sell everything from your insurance fund, the account will be cleared and you cannot hope for any annuity payment in the future. However, you will now have a lump-sum cash return, to spend as you wish. On the other hand, if you need some money fast, but you don’t want to give up on your annuity, you should opt for a partial withdrawal. You will sell just a portion from your payments and you will continue receiving periodic fixed wages.
Annuity Selling process
If you want to sell your annuity, you have to know that this process is not a very complicated one. However, if you want to make the best deal, it’s for the best to contact a specialist. If you want to do it by yourself, there are some steps that need to be followed.
- Try to get all the records of your previous annuity payments and put all the papers together. If you cannot manage to find them all, you can get an expert. There is a national database of fixed annuities and he /she will be able to acquire the records for you.
- Choose a good annuity buyer. There are plenty of capital collecting companies available on the market, but you need to find the one that offers you the biggest cash offer and have the lowest fees. This is a complicated process and you will probably need an assignee, to find you the best offer.
- After you find a buyer and present your intentions, you will receive an offer. Most of the times, this offer is fixed and you cannot renegotiate it. You can accept the offer by signing all the papers and returning them to the buyer.
- Even after the 2 parties agreed on each other (you and the buyer) that’s not enough. In order for the deal to be valid, it has to be approved by a judge. You will have to attend a hearing, in which you should prove that you need the money for house / family related issues. If you tell the judge that you need the money to buy the latest model of Ferrari, the court will probably not approve the sale of your payments.
- If you have good reasons, the hearing will be nothing more than a formality and your request will be approved. Once the sale of your investment fund is complete, the papers will be transferred to your buyer. From now on, they will receive the annuity.
- You should receive your money in 3-5 working days after the transfer.
Main reasons for selling your annuities
A person can decide to sell its annuities for vary reasons. Even if they want to buy a new home, pay off some old debts or start a new business, this is the best method to receive their money fast. The inflation also determines many holders to sell their annuities. You already know how much money you will receive 10 years from now, but you don’t know what their purchasing power will be. That’s why, more and more people decide to eliminate the risk and to invest their money in a safer place. Selling your annuity is a permanent decision. Before doing that, you have to think it through and talk about it with your family.