Explained as simply and quickly as possible, an annuity is a contractual product obtainable from various financial institutions and it works as follows: funds are accumulated from the individual in question over a certain period, and upon annuitization that amount will be paid out over a specified amount of time. Annuities are quite popular among people thinking about retirement as they allow them to have another stream of income in addition to their pension. They are basically a type of insurance for the future, cash savings that are meant to prevent financially-uncertain days.
What are the Different Annuity Types?
Annuities can be categorized according to a few different factors, starting with the amount of time that a payment plan can be guaranteed to continue. There are plenty of options to choose from, ranging from payments over a fixed amount of years to payments that continue as long as the person in question is alive.
Following that, annuities are differentiated as either being fixed or variable. The former guarantees the annuitant with regular periodic payments, while the latter brings some flexibility to the situation, allowing the client to receive more or less cash in the future, depending on how well their investment adventures are going.
It ought to be noted that virtually every annuity contract comes with a surrender period, and how long it lasts entirely depends on the terms that were negotiated. However, that period can last anywhere from a couple of years to a few decades, and if the annuitant decides to withdraw some money a penalty will be incurred so as to dissuade them from doing so.
A Look at the Two Annuity Selling Options
When it comes to the sale of annuities, there are two distinct options: partial or entire sale. As may be derived from the name, a partial sale allows the annuitant to touch a part of their money to settle a pressing matter without losing the possibility to receive future annuity payments. An entire sale, as the name would indicate, is something reserved for more extreme situations and involves the transformation of all the annuities into an immediate monetary payout. The terms and conditions which address these sales in a contract are negotiated from one case to the next.
How Selling Annuity Payments Works
An annuity contract is something generally negotiated far ahead of time, and so it is entirely possible that your plan will no longer fit the needs of your life, for whatever reason. At this point, many believe that they are simply stuck with the disadvantageous consequences of the decisions they made decades before even thinking to retire. Thankfully though, there is some good news on that front: it’s entirely possible to sell annuity payments to others. There are no legal tricks involved or anything of the sort, as it’s a very simple and easy process.
First off, you need to find a company to buy your annuity. If there is a lack of interested parties, it’s always possible to turn to one of the many companies that specialize in purchasing annuity payments. While they are pretty much guaranteed to buy, they will offer a lower payout than what one might expect, so going for one of those shouldn’t really be your main option. Anyhow, once an interested party has been located you must negotiate the value of your annuity contract and the sum of money to be paid for it, which can be done in person or through legal agents. The technical aspects of the process are far from being complex; finding the right buyer is really the most difficult part.
The Main Reasons for Selling Annuities
What are the reasons you might be looking to sell your annuity payments? To begin with, changes may have happened in your life and you find yourself in need of money to either pay back some debts that can no longer be deferred or invest in a new business idea. Alternatively, it’s also possible to inherit someone else’s annuity plan, in which case it becomes even more likely that it won’t be suitable to your specific needs. Perhaps your long-term plans for the future have changed completely and you want to take a whole new approach to financing them. There will always be reasons for selling annuity payments, just like there will always be those willing to buy them.