Day by day. Year by year. We work to sustain our life and our families. Whether is sitting at a desk, standing long hours dealing with customers, or busting your hump out in the fields. You work hard for your money. Every penny is well earned and much deserved. Some of you took the time and prepared for your future retirement plans with an annuity. Annuities are a great option for those looking to have a nice stream of money coming in when you finally decide to retire. However, life sometimes throws a curve and you’re left with a big decision. If your financial situation changes, remember that you have the option to sell annuity payment.
Back to Annuity Basics
Annuities are in fact an investment. They’re a type of insurance that you gradually invest in for your future. This makes them a great part of your retirement strategy because they provide you with continuous income for the rest of your life. There’s not just one type annuity. There are 5 types of annuities that you can choose from. Depending on your retirement goals. They are:
- Deferred Annuity
- Immediate Annuity
- Fixed Annuity
- Variable Annuity
- Fixed-Indexed Annuity
Deferred annuities invest your money over a certain amount of time. Typically, that is once you retire and start making withdrawals. Immediate annuities allow you to be able to receive payments right away once you make that first investment.
Fixed annuities have a fixed rate of interest built onto your investments. These rates are guaranteed. They also allow you to withdraw money right away or defer your payment until you’re ready.
Variable annuities allow you your choice in mutual funds to invest in. Their performance is what give your account its value. This option also allows you to add a rider which guarantees a level of income no matter how the market performs.
Fixed-Indexed annuities combine a fixed annuity with a variable annuity. Depending on the underlying market index, this option with a positive market index can guarantee a minimum level of income.
Wondering About Your Selling Options?
When it comes down to your options of selling your annuity, you’ll come across two separate options. Partial and Entire Annuity selling.
Partial annuity selling is exactly how it sounds. You can sell a certain portion of payments while retaining your income of the period without the risk of losing any tax benefits. This will also extend to any heirs you may have if you are no longer alive to accept them.
Entire annuity selling—again is exactly how it sounds. This method allows you to sell the entire annuity for however long the contract is. Once your investment is emptied you will no longer get any more structured payments. Leaving you with one lump-sum cash payment.
How You Go About Selling Your Annuity
Annuities are regulated by both Federal and State law. This protects the sellers and the buyers. To sell your annuity, you’re going to need to review specific documents as well as some other disclosures. You most likely will need to call upon a lawyer or a legal representative to assist you.
Next, you will need to contact whomever your policy was taken out with. Whether that’s a Broker or insurance company. They will go over the option of sale with you. Making sure you understand the pros and cons of each choice. As mentioned above, the selling options are an entire and partial annuity sale.
Before committing to a sale, make sure to ask about the buyer’s discount rate and your annuity value. The discount rate is a prediction on future interest rates that a buyer will conduct to value your annuity. Whichever buyer has the lowest discount rate is the buyer you should sell to. That means you’re getting the most money back on your annuity. Your annuity value are the other factors that impact the overall sale price of your annuity. Factors like: economic conditions, predicated future rates, associated fees on your annuity, as well as your annuities payment selection.
After decided on what sale is the best fit for your needs, the company or Broker will provide the legal documents that were mentioned above for review. As suggested before, legal counsel is a good choice to allow yourself the knowledge of what the document entails. Once the documents are signed and reviewed, you or your representative should send them back to the company or Broker to further the legal process in court.
Depending on your choice of sale, and where and who you sold your annuity to, you may be given your money in advanced. Typically, it takes about 2 months for the process to conclude. However, some annuity buyers will give you cash upfront before the conclusion of the sale. Allowing you to do as you see fit with your savings again.
The secondary annuity market continues to grow with appeal. If you find the time has come and you need to sell your annuity you’re in luck. The options and help are there for you to handle your sale quickly and provide you with the highest value for your annuity. Keep in mind to always understand what is being done and how it impacts you. It could be just the information you need to commit to sell or keep.