Sell My Annuity Payments
Written by Jovan Johnson
Can I sell an annuity for cash?
Absolutely. However, it is important for you to decide how much money you need to determine if you sell all of your annuity or a portion of it. Third party buyers of annuity payments are standing by to make you offers.
You can sell your current or future annuity payments to a third party buyer in exchange for a lump sum payment. An annuity can be sold as a whole or in part based on your needs. Many people will sell their annuity because their financial circumstances change and they need cash immediately rather than waiting for their scheduled payments. These needs can include a down payment for a house, paying college tuition, or starting a business.
Selling an annuity is an important transaction that can have major financial implications, so it is advisable to consult with an attorney and/or accountant before moving forward with the sale.
How do I sell my annuity?
Generally, selling your annuity is a fairly straightforward process:
1) Reach out to us and speak with one of our friendly representatives. They will work with you to gather the necessary information about your annuity.
2) After receiving the details of your annuity, we will send you a quote to buy your annuity. You are not obligated to accept the quote and we will layout your various purchase options in the quote.
3) After considering our quote, if you’d like to move forward, you would select the appropriate option and we would start the sale process.
4) We work with you to produce and complete the necessary paperwork for the annuity sale. These documents will include an executed copy of your annuity agreement and other related documents.
5) You will need to sign a sale agreement to authorize us to process the sale for you.
6) The insurance company holding your annuity will receive the sale request and accompanying documents from us. In many jurisdictions, a court will need to approve the sale and will usually ask questions regarding your current medical health and whether you will have the ability to pay for your future expenses if you sell your annuity. Our representatives will work you to guide you through this process.
7) After the transaction request has been approved by your insurance company and the court (in the case of a structured settlement annuity payable on account of a personal injury claim), we will forward you your lump sum payment.
How much cash can I get if I sell my annuity?
The amount of the lump sum you receive will depend on various factors such as the amount of your annuity, your payment schedule, and the discount rate. The discount rate determines the fee the company charges in order to make profit on the sale and will directly impact how high your lump sum is.
Also, it’s a good idea to ask any potential buyer for a detailed breakdown of their quote to ensure there are no hidden fees and all charges are transparent. Since there are various factors involved in formulating a quote, it’s a good idea to request quotes from various companies to ensure you have enough information to make an informed decision.
Resource: The Washington Post describes aggressive and illegal behavior by a company trying to convince people to sell their settlement annuities.
Do you provide free quotes?
Yes! All of our quotes are provided free of cost, and you are not obligated to accept any of our quotes. And, of course, we would love your business if you like our offer.
Do I have to sell all of my annuity payments?
No, you do not need to sell all of your annuity payments. There are various ways to sell an annuity:
1) You can sell a period of your annuity payments, which would involve selling your annuity payments for a set period of time and then you would resume receiving your payments once the period has expired;
2) You can sell a portion of your scheduled annuity payments, which involves selling part of each regular payment you receive (this is also known as a “partial buyout”) while you keep the balance; or
3) You can sell all of your annuity payments in exchange for a lump sum amount.
Do I get money quickly after starting the process of selling my annuity?
The actual process of selling an annuity can take a couple weeks in the event it is not a structured settlement, up to usually 6 to 8 weeks if a structured settlement requiring a court order. As a result, many companies (ours included) will pay what’s known as an “advance.” Once you agree to move forward, with us we can offer you an immediate cash advance, provided you are qualified, which will be recouped later from your lump sum after the sale is finalized. Our advances are interest free and without fee.
Will annuity riders impact the amount of cash I get when selling my annuity?
Yes, riders can impact the amount of cash you receive when you sell your annuity. A “rider” is an amendment or change to your annuity. Much like an insurance policy, an annuity rider can be executed to guarantee income for you or a loved one or help protect against unforeseen financial difficulties.
An example of a rider is a “medical annuity rider” which alters your annuity based on health or life events and will provide additional benefits if certain events occur. A “death benefit” is a type of medical annuity rider which allows your family to continue receiving annuity payments or take the balance of the annuity as a cash payout. Normally, annuity payments are only made for the life of the purchaser, but a death benefit would continue the payouts after death of the annuitant.
IRS overview of state-by-state requirements to appear in court.
Do I have to go to court to complete my annuity sale?
In the event your annuity is a structured settlement, then most likely, yes. Many jurisdictions require court approval before an annuity is sold and the company purchasing your annuity will be able to walk you through this process. The judge will need to verify that selling the annuity is in your best interests and that neither you nor your family will be placed in financial jeopardy because of the sale. This approval by a court is one of the primary legal protections that ensure annuitants are not taken advantage of.
Do I have to pay taxes if I sell my annuity payments?
When you sell an annuity, there are usually tax implications if it is an investment type annuity. However, if your annuity is a structured settlement on account of a personal injury then the sale of your payments is a tax exempt event. Moreover, it may be possible in investment annuity situations for you to delay taxes by rolling funds into another like kind product using a qualified exchange. These can be complicated procedures and in such situations you may wish to seek out financial and tax advice.
Do I have to pay fees when selling my annuity?
When selling your annuity with us we do not charge any fees. We offer a “no surprise” price that is all inclusive of costs, legal fees, profits, and so forth. The price we quote you is the price you receive at closing. By selling future payments for a present day lump sum, we apply a discount rate that brings all these payments back to today’s date. The discount rate is calculated by taking into consideration things such as future interest rates. A higher interest rate means the less the money you will receive and, therefore, the worse the deal is for you.
Resources: Investors.gov provides highlights of fraud that requires individuals pay an advance fee and the possibility of a surrender charge for those who sell their annuity too soon after buying it. Investopedia dives into present value, pertinent in considering whether to sell annuity payment rights, including the discount rate.
Is the offer we give you better than that possible from other buyers?
We can’t guarantee that they are, but we will always work to give you the best quote we can! And if you get a better price somewhere else, come back and we will do our best to match or better it. We want to make sure you get the best deal and work only with reputable buyers.
Resource: CNN overview of annuity penalties and surrender charges.
Are there penalties if I sell my annuity?
Penalties are generally not applicable when selling your annuity. However, keep in mind that the purchasing company will give you a quote based on a discount rate, and, although not a “penalty,” the discount rate will definitely result in a lump sum that is less than the future value of the annuity.
Resource: US News & World Report answers common annuity questions.
Who pays the premiums on my annuity after it’s sold?
If you sell your entire annuity contract, you won’t have to pay the monthly premiums moving forward. All responsibilities, including payment of monthly premiums, will need to be fulfilled by the company to which you sold the annuity. But, if you sell just a portion of your annuity, then you would still need to make at least a portion of payments moving forward.
Resource: Thebalance.com provides a rundown of how different types of annuity premiums work.
Last revised: November 4, 2020