An annuity is a long-term contract between you and an insurance company in which you give them money upfront, and they’ll grow it through investing and later divide into payments for your retirement. While annuities are great for making sure that a large sum lasts for a long time, sometimes you need to access your money right away. If your financial circumstances have changed and you want to trade future payouts for a lump sum now, we’ll walk you through the process in four simple steps.
Why Should I Sell My Annuity?
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Selling your annuity can help you get the cash you need right away in the event of a major life change or if you simply want to transfer your assets to a more profitable investment. Everyone has a different reason for selling their specific annuity, but here are some examples of situations where it simply makes sense to sell:
- You have an investment opportunity or want to start a business
- You or one of your children is buying a home and you want to make a down payment
- You have a high-interest debt you would like to pay off
- You are concerned about inflation decreasing your future purchasing power
1. Meet With a Financial Advisor
Before officially starting the process of selling your annuity, meet with a financial planner to help you decide if it is truly the best decision for your finances. An annuity is a legal contract, so you should consider all of the possible benefits and risks with the help of a seasoned professional.
Because annuities rely on long-term payouts, you’ll usually only be able to get a certain percentage of the annuity’s total worth in immediate cash. A financial advisor can help you decide if any initial losses are worth the potential gains. Your advisor can also help you decide if you want to sell the entire annuity, or just cash in on a portion of it and keep the rest for your retirement.
2. Research Possible Buyers and Get a Quote
Next, spend time researching different purchasers to see who will give you the best deal. Look for reviews, or ask friends for recommendations. Your financial advisor may also be able to give you leads on companies that will give you a great price for your full or partial annuity. Gather free quotes from multiple companies before making your final choice.
3. Submit the Required Paperwork
Once you choose a buyer, start on the paperwork to transfer the annuity into their name and get you paid. You can often get help from the settlement company’s lawyer or your own personal legal advisor.
4. See a Judge
You need a judge to approve the sale, so the final step is setting a date and preparing to appear in court. The settlement company’s lawyer will attend to represent them, and you can also bring your own lawyer. Make sure you have an ID and a professional outfit to wear and be prepared to explain how you plan to budget your lump sum once the sale is complete.
Once you complete the sale, you can often access your money within a matter of weeks and get on the road to financial independence.