Annuity is an investment product and is available with insurance companies. For those who are planning to secure their future, annuity can be a good choice investment. There are different annuity plans available with insurance companies.
The annuity doesn’t limit the amount to be invested. No income limitations and no compulsory withdrawal. Annuity policies are thus very popular as they offer definite income even after the retirement. The payment may be fixed or variable depending on the plan choose. Well, a deferred annuity offers a constant flow of payments after a certain period of time. Annuity can be purchased, sold or inherited from a family member.
Selling Of Annuity
The situation comes in life when the person needs immediate money. The financial troubles come without any prior intimation. In such situation, the annuity can be used to generate instant cash to meet the financial problems. You may need a lump sum amount for medical purpose, education purpose, etc. Selling annuity can be a best option rather than taking loan at heavy interest rates.
The reasons for selling annuity are basically financial crises or financial troubles. Selling the structured settlements can be the solution to a range of financial problems. It can be starting a new business, buying a house, repairing a house, buying new furniture, paying off the debts, paying student loans, funding a collage education, etc. A portion or the whole amount of annuity can help you get back your financial imbalance in control. Accessing annuity can be a better solution over most of the financial troubles rather putting your life on hold.
Selling Options Available With Structured Payments
You can either sell your annuity in part, entirety or in lump sum. Every option has its own characteristics and is designed to help the person in controlling financial imbalances.
Partial Selling Of Annuity
As the name, Partial, it suggests, selling a portion of your annuity payments. Here you can sell a part of your annuity settlement and can continue receiving periodic income. The income your will receive even after selling part of annuity will be non-taxable. The structured settlement will continue to carry all the tax benefits to you and to your heirs in case you die before collecting all the outstanding payments.
If you choose selling the entirety of your annuity payment for the full term of the contract, then you are emptying out the investment at once. Well, in such case you will not receive any periodic payments in the future. But you receive a lump sum amount in your hands to satisfy financial needs.
Lump Sum Option
Selling the annuity with lump sum option offers you the lump sum money in your hand. But in this case, it guarantees that you will have a steady flow of income from your structured settlement for the term of contract. Such flow of income till the end of the term of the contract is tax-free and carries the same tax benefits as before.
Process Of Selling The Structured Payments
It is very easy and straightforward to sell the annuity settlements. There are no hassles or troubles in the process and you end up with money in your hands as soon as possible. The structured settlement companies complete more than thousand transactions per month. The settlement of annuity is thus very fast, speedy and dedicated to offer financial assistance in time.
Here are the steps involved in the process of selling the annuity settlements:
Make The Decision To Sell
For those who need cash instantly and the reason is valid, selling the structured settlement can be a great option available. The process starts from the moment the person decides to sell the annuity.
Contact The Structured Settlement Companies
Once the person decides to sell annuity payments, the next step is to contact the best structured settlement companies in the area. The company’s representatives will guide through the steps of selling the structured settlement payments. They also provide guidance about the different options available for selling the structured annuity payments.
Get A Free Quote
Most of the structured settlement companies offer free quotes about the amount of annuity the person can receive.
Get A Cash In Advance
Once signing up with the structured settlement companies, they can provide with the cash in advance against your structured annuity settlements. The person can use the cash for the very reason he or she decided to sell the annuity.
Setting Court Dates
Structured annuity settlement needs proper documentation and paper work to be submitted to the law. Once the paperwork is submitted, the person needs to present the reason for selling the annuity before a judge. The structured settlement companies arrange setting up a court date for the convenience of the client.
Once the paper work is submitted along with the reason for selling the annuity and once the court accepts all these, the person can access the money.
This is how easy to sell the structured annuity settlement. Well, the amount of money the person can get depends on the few things.
The Factors affecting Value Of The Annuity
The amount of money to be receivable from settlement of annuity depends on the value of the annuity. There are several factors those affect the value of the annuity. The first thing is the company with whom you choose to do business. There are potential seller those shop the payment in for best up-front price. The total amount depends on how many payments are sold and when these payments are scheduled for payment. More the payment for sell, more the cash the person can receive.
To sum up, the different factors affecting the value of annuity are:
- The amount of payments and how much payments for selling
- Length and the timing of payments
- Any lump sums the person want to sell
- Current economic conditions
- The fees charged along with extra charges if any
Buying annuity is a business for the companies and the companies those buy structured settlement intend to derive profit out the transaction. Obviously, the final price will never be above the price of annuity.
In most of the cases, the final price is decided at 60 to 80 percent of the original value of the annuity. It could be as low as 50 percent. Well, the market conditions are the most important factors affecting the final price of any annuity settlement. Particularly the institutional interest rates set by the Federal Reserve constantly changes the percentage of the annuity settlement.
Structured Settlement Loans
The payment streams coming from structured settlements is totally different as compared to the income generated through other assets. And thus it is unable to borrow money against structured settlement as collateral security. However, the person can transfer the right of the payment to third party or with the settlement-buying company. Against these structured future payments, the third party can advance money immediately.
Laws For Structured Annuity And Its Sell
Selling the rights to future payment is legal and forty-three states passed the law namely Structured Settlement Protection Acts (SSPAs) that safeguards the rights of the annuity holder. The act covers the rules for transfer of structured settlement payments to the third party.
Selling the structured annuity involves a very easy and straightforward process. It can easily be done and a person can easily have cash in hand. Well, it is recommended to take sound advice from the lawyer or from the financial analyst. This will save from poor valuation of the annuity settlement and saving of taxes.