Need Cash Now Instead of a Little at a Time? Sell Your Annuities and Have Money In Hand.
Sure the payments are nice and consistent, but what could you do if you had a lump sum to invest right now? Take those annuity payments and turn them into cash and be in control of your destiny. Let us show you how.
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Sell Your Annuity Payments
Understanding annuity payments can be a tricky undertaking. Wether it’s from a lottery payout, an income annuity, or even an amortized loan, your annuity payments are in essence any type of consistent periodic payments. Now, I’m sure if you’re like most people, you have bills to pay, credit to clean up, or sudden unexpected needs where those structured settlement payments could be put to better use if you had the money up front. This is where you look at selling your annuities in exchange for cash up front so you have some felxibility to handle your finances now instead of later. The question that is asked most often is “how do I sell me annuity payment and to who?”. And the follow up question is inevitably “is my payout the sum of my payments or what to I gain or lose in this transaction?”
We’re going to walk you through how to calculate the current value of your payments, easy formulas for determining your settlements value, and even how to use the online calculator resources available to you. Then, finally, we will walk you through how to sell your annuity payments to get the money you need now.
Determining the Current Value of Your Annuity
For most individuals, determining the value of your annuity can be challenging. We all took algebra in high school but how many of us still use it in our daily lives? However, once you have the formula and can input the data you know, figuring out what your settlement is worth currently can help you determine if selling is right for you. You will first need to know your payment amount. This is usually the easiest for people to gather and many know it off the top of their head. Next, you’re going to need the total number of payments or pay periods that make up your total annuity. and the one variable that could make your estimate a little harder to factor is the rate per period. Assuming it’s a fixed rate makes the formula much easier to determine, otherwise, an annuity that changes the rate and/or the payment would need to be adjusted and calculated for each change. Once you have all of this data, it’s time to start crunching numbers into the formula below.
Keep in mind “P” is equal to your payment amount, “r” is your rate, and “n” is the number of periods or payments at that rate.
Here’s a wonderful graphic on The Value of Annuities that can help explain some of what you’ve just read:
Source: TIAA-CREF – http://visual.ly/values-annuities
The Different Methods of Selling Your Annuity
Once you’ve determined the value of your annuities the next step is to determine what type of payout is best for you. Now, most annuities can be sold off in one of three ways depending on what your needs are or what might be financially advantageous for your current situation. Just about anyone that sells off their structured settlement can get either a partial payout, they can sell it in its entirety, or even choose lump sum payments.
Sell My Annuity Payments for Partial Payment
Partial Payment options are great in the event that you have an unexpected expense but still would like to continue your structured settlement in the future. This option does give some flexibility in that if you sell a portion of your payments, you will continue to receive periodic income without sacrificing the tax benefits. You can collect a portion for a specific need like a down payment on a home, or an unexpected expense that savings can’t cover, while yet keeping your structured settlement to carry the tax benefits, and extend them to your family o heirs in the event you die before collecting all your payments.
Selling My Annuity Payments in Their Entirety
Taking your entire settlement for one amount for the full term of the contract means you’ll cash it in at once, ending future periodic income payments, but you will have a large lump-sum payment in your hands to invest how you see fit. Many people choose this option if they want more control over their money, would like to invest their money in other ways, or have a large purchase like a house that they would like to make. The tax implications with selling an annuity in its entirety do change from having regular structured payments so it’s important to know what choice you want to utilize when annuity selling.
Selling My Payments for Lump Sums
If you are thinking that you don’t really want to sacrifice the tax benefits of a structured settlement and the payments over time, but would still like a chunk of money at given intervals for investment purposed then perhaps a multiple lump sum payment method is right for you. It still gurantees you’ll have a steady flow of income from your settlement for the full term of the contract, while still carrying the same tax benefits.
The Selling Process Once You’ve Done Your Homework on Selling Your Annuity
You’ve determined your value of your settlement, you’ve decided how you want it paid out to you, now what? What are your next steps? Well, you will start by getting quotes from reputable sources on selling your annuity. Typically these investment companies can walk you through the paperwork and give you a detailed quote on what they provide to you for payout options. One thing to keep in mind during this process that is critical is that in many instances you will need to submit paperwork to the court detailing the reasons for selling your payments and present them before a judge prior to getting your money. Once the court accepts your reasoning and your transfer, you are able to get your money and invest how you see fit. Picking a company that can help make this smooth and timely can be a deciding factor in your journey so you are now well on your way to making a great choice for selling your structured settlement.