Get Cash For Annuity Payment
Annuity
Annuities are a series of payments made at the same interval. Examples of annuities are regular deposits to savings accounts, monthly home mortgage payments, monthly insurance payments, and pension payments. Annuities can be classified based on the frequency of the date of payment. Payments (deposits) can be made weekly, monthly, quarterly, yearly, or at other regular time intervals.
Annuities that provide payment for a person's remaining lifetime are a lifetime annuity.
Type
Annuities can be classified in several ways.
(1) Payment time
Payment of annuities is made immediately at the end of the payment period, so interest arises between the issue of annuity and the first payment. Payment of annuity due is done at the beginning of the payment period, so payment is made immediately on the issue.
(2) Contingency payments
Annuities that provide payments that will be paid during the period known in advance are a certain annuity annuity or guarantee. Annuities paid only in certain circumstances are contingent annuities. A common example is a lifetime annuity, which is paid for the rest of the annuitant's lifetime. Certain annuities and life are guaranteed to be paid for several years and then become dependent on living annuitants.
(3) Diversity of payments
- Fixed annuity - This is an annuity with a fixed payment. If provided by an insurance company, the company guarantees fixed profits for the initial investment.
- Annuities remain not regulated by the Securities and Exchange Commission.
- Variable annuities - Registered products regulated by the SEC in the United States. They allow direct investment into various funds specifically made for variable annuities. Usually, insurance companies guarantee certain death benefits or lifetime withdrawal benefits.
- Annuity equity-index - Annuities with payments related to the index. Usually, the minimum payment will be 0% and the maximum will be predetermined. Index performance determines whether minimum, maximum or something is credited to the customer.
Deferred payment
Annuities that start payment only after a period are deferred annuities. An annuity that starts payments without a delay period is an immediate annuity.
Cost
Although their potential for greater income, variable annuities and indices is sometimes criticized for their costs and relative complexity. For example, many complainants find that they have to pay a steep surcharge if they try to spend their money in the first few years of the contract.
Tax Treatment
An important feature that needs to be considered with each annuity is the tax treatment. While your balance grows tax free, payments are subject to income tax. Conversely, mutual funds that you hold for more than one year are taxed at a rate of long-term capital gains. And unlike a 401 (k) account, contributions to annuities do not reduce your taxable income. For this reason, some financial experts recommend annuities only after maximizing your contribution to a pre-tax retirement account.
Why Sell Annuity Payments?
The annuities you can sell may have been purchased by you or inherited from a family member. You may want some lump sum cash from a structured settlement from a personal injury case or other lawsuit such as medical malpractice. The reason for wanting to sell your annuity may be nothing more than the need for some immediate cash. Maybe you want to buy a new house, start a business or pay for the education of your children. Because of the deferral of taxes on annuities one might sell some or all of their annuities to avoid being placed in a higher tax bracket upon retirement. The lump sum cash for annuity payment option needs to be considered carefully.
How beneficial are annuities
An annuity should really be held for many years to get the most out of this type of investment. Buying an annuity a couple of years before retirement is not such a good investment and the benefits do not really outweigh the costs. Therefore one might consider selling their annuity and invest in products that produce a higher yield or return on their investment. People holding variable annuities may be wiser spending time managing investments in securities to gain a better return on their investment. The reason for this is that variable annuities do not guarantee a fixed stream of payment like fixed annuities do. The payments you'll get from this type of investment will be based on your ability to assemble a good portfolio of securities.
So How do you sell your annuity?
Well first of all establish the value of the annuity. Figure out the discounted value of the annuity's future cash flow in order to determine it's current value. This ought to be the price that you get when you sell your annuity. If the market price of your annuity is less than it's current value then you should not sell the annuity. Instead hold on to it until the market value is at a point where selling makes financial sense.
Decide whether to sell all or part of your annuity. A nice benefit that a secondary market for annuities has to offer is the opportunity to sell a part of your annuity payment and hold on to the remainder. As an example you could sell 1/3rd of your regular monthly annuity payment for certain number of years and get a lump sum amount while still getting your other 2/3rds every month.
Cash for annuity payment, finding the buyer
An established structured settlement company can figure out the value of your annuity. They will also lead you through the steps and documents needed to proceed to sell your annuity payments. These documents will include the annuity policy itself, copies of the annuity checks you have received, tax returns and various other documents. While there is obviously a fee for this service it will speed the process up and help you avoid mistakes that could cost you money.
If you find you cannot sell your annuity for the price you want, think about swapping your annuity payments for a more agreeable annuity. As an example you could swap your variable annuity payments for fixed payments using an annuity swap. It might also be possible for you to use your annuity as collateral for a loan if you are in need of some cash but is can't sell annuity payments for a decent price.
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