If you’re receiving payments from your annuity or structured settlement, you probably get these payments over time. If at a point during the life of your settlement, you decide you need more money in the short term rather than in the monthly or yearly payments available to you now, you have the option of selling annuity payments for a lump sum.
Selling your annuity means transferring the rights to your future periodic payments in exchange for a lump sum that can be used for major life events that affect you and your family.
When something important in life happens, selling your annuity may be the answer, but it can be a difficult process. Here are a few tips to help you get started:
- Only Consider Selling Your Annuity to Pay for a Major Life Event. Ultimately, the sale of your annuity is up to the state court judge who will have to sign off on the sale declaring it a legitimate sale and in the best interest of you and your dependents. Although you may want to sell your annuity to pay for that honeymoon you’ve always wanted, to take the kids on vacation, to buy a new sports car or to add a swimming pool in your backyard, the court may not approve. A judge will be much more likely to agree to the sale if you need the extra money for an important life event, including:
- Having a baby
- Buying a home
- Remodeling your home
- Purchasing investment property
- Launching a new business or reinvesting in your current business
- Funding your child’s education
- Paying off credit card debt or medical bills
- Divorce costs
- Buying a dependable vehicle to keep your job
- Job relocation costs
- Know How Much You Need in Advance. If you know how much money you need to cover your expenses, it will be easier to decide if you should sell your annuity in whole or in part. You do not have to sell the entire amount of your annuity if you don’t want to; however, the amount you sell may largely depend on the company you sell it to. Some companies have a minimum requirement they will buy, and most companies evaluate your annuity and put a cap on the payout based on their evaluation.
- Don’t Commit Too Fast. While all companies that buy annuity and structured settlement contracts look and sound alike, no two are the same. Some companies will offer a larger payout than other companies, and some companies can get your money sooner than other companies. Do your homework, and choose the company that best fits your needs.