If you are receiving structured annuity payments and would prefer to have a lump sum of cash, you should be aware that you can sell your annuity to a firm that specializes in this type of transaction. This can be a great way to access a lot of cash that you may need right now, but there are a few things you need to understand about selling an annuity. The following are three of the most important.
The sale is permanent
Although this should be obvious, it still needs to be stated. This is especially true if your annuity payment is a part of your retirement. You need to understand that once you get a lump sum and cash out your annuity, you will have less monthly income. For many people, this annuity is something that was inherited. If you are one of these people, you may already have a retirement plan and do not need a monthly annuity payment. In this situation, cashing out can make a lot of sense.
You can sell a portion of the annuity
This is an important aspect of selling annuity payments. Often you will hear the phrase cash out used, and of course, the idea of all or nothing comes to mine. However, you do not have to sell the entire annuity. Selling only a part of the annuity can be an attractive option for someone that needs money now, but does not need so much that the entire annuity needs to be sold. When you are looking for a company that will buy annuities, make sure that they will buy a portion of the annuity. Not every firm will do this.
You may incur surrender charges
When you sell your annuity, you will be selling it for less than the total amount that it is worth. After all, a firm that buys annuities is attempting to make a profit. However, what you may not be aware of is that you may incur additional charges for selling some annuities. These are referred to as surrender charges. In addition, many annuities are tax free, but if you cash out, you may face tax implications.
Before you decide to sell annuity payments, you should consider the information listed above. Once you have thought about all of the details, you may find that selling your annuity is a good idea.