Widely used in the economical and legal field, the term of annuity refers to a sum of money received by the annuitant at regular intervals, either as a form of insurance or as compensation for malpractice, lawsuits or injury. There is also the case when annuities are received as retirement funds: money is paid to an issuer and then when the maturity day comes, the beneficiary starts to receive sums at regular intervals. Sometimes, annuities may come for several years or they might cover the entire lifetime. For example, American citizens who win a considerable amount in the lottery will receive it in smaller sums for many years to come. Financially speaking, receiving money like this has its share of long term benefits, annuities being like a second salary. However, not few are the cases when people decide to sell annuity payments for a variety of reasons. The tendency is in fact so widespread that there is a significant secondary market where it is possible to find an annuity buyer and receive a lump sum of money rather than smaller amounts at fixed intervals. What makes people take the decision “I want to sell my annuity?”? There are a number of reasons for this, both personal and financial. |
First of all, there is a strong personal inclination that makes people prefer money readily available over money which will arrive in the future. While some feel secure about the idea that, for many years, they will receive a certain amount, others would rather have all the money at once. Those who sell annuity payments usually do it in the case of emergencies or unexpected spendings. Redecorating the house, buying a new car, paying for college tuition are investments that require a lot of money, which unfortunately is not at one’s disposal as the need arises. There are also serious situations when annuitants lose their jobs, go through a divorce or have to pay their mortgage and the only solution to obtaining the necessary money is to sell annuity payments. Therefore, it is economically wise to contact an annuity buyer and receive a lump sum which can be used for investments or emergencies.
“I don't need a consistent sum of money now, why should I sell my annuity?”This is also another question annuitants ask and the answer is linked to an economic principle saying that money you own now is better than money which will be received in the future. While it is true that it provides a certain sense of security that you will have an amount coming every month/year, it is also true that the value might decrease because of taxes or unexpected problems with the economy or insurance company. For example, in current economical context characterized by insecurity, people fear that the annuity value will drop, which is why they decide to sell annuity payments and use the received lump sum for greater investments.
No matter the reason to sell annuity payments, an important principle still stands: each annuitants is different, so before making a deal with an annuity buyer, it is recommended to seek consultancy and learn more about all the financial and legal implications of getting cash for annuities. Last, but not least, selling annuities is a process that should be well thought of in advance and not a spontaneous decision.
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