An annuity is a great tool that allows individuals to plan their finances and improves their financial stability and security. It is a contract between the buyer and 3rd party company, which will enable the annuity buyer earn some benefits from the contract. The benefits can be a regular income for a certain period, accumulated wealth or assets, long term health care benefits, or live insurance. It is long-term financial investment, but not necessarily something you have to stick with it forever. In the case of emergencies that need cash sooner, you can sell the annuity for a lamp sum and regain control of your money.
Types of annuities:
Annuities are classified into fixed annuities and variable annuities:
Fixed Annuities:
In fixed annuity, the insurance provider offers guarantee on principle and minimum interest rate. The buyer is guaranteed that the money he has in fixed annuity will always be growing and will not drop as long as the insurance company is in sound financial state. Fixed annuities can be further classified into:
– Immediate annuities: immediate annuities are investments that earn you income immediately or within one year of buying the annuity.
– Deferred Annuities: involve paying benefits from a later date that can vary from 1 to 50 years.
– Multi-Year Guarantee Annuities: it involves paying only fixed interest rate every year for a given period.
– Indexed annuities: this involves baseline indexes that determine the growth and performance of your annuity. The baseline indexes can be investment assets such as real estate, Dow Jones, Gold, etc.
Variable Annuities:
A variable annuity is a type of annuity where the principle value depends on the performance of sub-account values where the principle values are allocated. Variable annuities work like most other investments and are licensed to be sold by companies that are licensed to sell both investments. It can make great investments for those individuals who can tolerate risk on their portfolio. Variable investments are normally available at higher prices due to insurance policies involve.
Selling Annuity Payments:
If you are looking to sell annuity payments, you have to contact annuity buyers. The professionals will analyze your case and help you consider various available selling options. The selling options available include lump sum sale and partial sale.
Full Purchase: this involves selling the annuity to RSL funding in its entirety and you will receive a lump sum payment up-front. Once you receive the payment, no other payment will be made from the settlement or annuity.
Partial Purchase: partial selling of annuity payment involves selling the annuity payment to the buyer for a specified period. During that time, you will not be able to receive annuity payments but once the period elapses, you will continue to receive annuity payments. This type of settlement is good for individuals who are not interested in the payment now but may need them in future.
Reverse Partial:
Reverse funding involves selling future annuity payments. You will continue to receive the annuity payments over specified time and once the period elapses, the payment is transferred to the buyer. This kind of arrangement is recommended for individuals who want to continue receiving the payment now but still want to sell the annuity payment.
What to consider while selling annuity payment:
While considering how to sell your annuity payment, it is important to consider various factors such as the value of an annuity, tax implications and discount rates. Here are the factors to consider:
– Discounted Rates: Annuities are normally sold at a discounted rate depending on the predicted future interest rates. While looking for the buyer, consider the discount rate that the buyer prefer to use.
– Annuity value: the annuity value is determined by various factors current economic conditions, fees and charges that the annuity involves and well as predicted future economic conditions.
Conclusion:
Before selling your annuity or structured settlement payments, it is important to determine whether the money you are requesting is necessary or something you can do without. If you need a large sum of money quickly, then you have a reason to sell your annuity payment. If you are involved in a lawsuit, for instance, you may need a large sum of money to settle lawsuits bills. Or if have some necessities to invest in such as education or a house, you can sell your annuity to fund the investment. Selling your annuity can be the best decision when you need a lot of money to meet a significant expense. …