3 Options When Selling Annuity Payments

Posted by Right Way Funding on January 3rd, 2020

To ensure a stable financial future, people invest in an annuity agreement before retirement. This way, they're sure that their families can still live comfortably even after they leave their jobs. But, when life throws you a curveball, selling this is a major short-term solution for long-term debt or unplanned expenses.

Before you sell anything, it's crucial for you to understand what you're getting yourself into. Annuity owners have a few options when selling their payments. This includes entirety, partial, and lump-sum purchases. Read on to learn about them.

Entirety Purchase

The entirety or straight purchase is the go-to option for those who want to sell their annuity. This strategy often includes selling the payment for the full term of the contract. This means the whole investment is emptied, which then provides the owner with a lump sum of money.

By going with this option, you're completely forfeiting any claims to future payments from the annuity contract. But, in turn, you'll instantly get a huge amount of money which you can invest in other endeavors or use to pay off debts.

Partial Purchase

For those that don't need to fully surrender their claim, you can sell only a portion of your annuity. In exchange, you'll get a lump sum, but at a lower amount.

With that in mind, here's an example: if a person with a 10-year contract wants to buy a new house, they can sell their annuity for the first 3 years. Once that has passed, the steady stream of payments will resume for the remainder of the agreement. In case you need money again, you can still buy out another portion.

Lump-Sum Purchase

This option is similar to a partial purchase, but instead of selling payouts, you buy out a specific amount. That would then be deducted from your future payments.

To give you an idea, if you need ,000 as a down payment for a car you've always wanted, you can sell a part of the annuity with that number specifically. This way, you won't have to sell more than what you have to.

Before you commit and close the deal, it's essential for you to seek counsel from professionals. They'll give you sound advice and evaluate whether this transaction is in your best interest. So, when you ask yourself, "should I sell my annuity payments?" you'll know the right answer.