People opt to sell annuity payments for various reasons. When annuities are sold in whole or in part, annuitants get lump sum cash. Funds are often used to pay off high-interest loans, fund college tuition, or invest in business opportunities to maximize profits.
Will Your State’s Laws Allow You to Sell?
In order to sell annuity payments, annuitants need to find out if the state where they live allows will allow such a sale. Currently, nearly two-thirds of states prohibit the sale or transfer of future payments in exchange for cash while states that do allow it usually require annuitants to obtain court approval.
To Whom Can You Sell Annuity Payments?
Annuity payments can be sold to cash advance providers, financial institutions, private investors and investment companies. While it is rare for banks to buy structured settlements, some financial institutions provide advance funds using annuities as collateral. Those who plan on selling annuity payments may have to do some legwork in order to find a buyer of good reputation.
Will the Policy Issuer Allow You to Sell?
In addition to obtaining court approval, annuitants must get authorization to transfer payment rights from the policy issuer. Certain documents outlining the number of payments sold and the name of the funding source must be submitted. Future payments are sent to the funding source until the advanced funds are repaid.
A lot of people only sell partial annuity payments as courts rarely allow the transfer of entire structured settlements and annuitants never obtain full face value for future payments since investors charge a fee that may be anywhere between 30 and 40% for providing cash advances.
For instance, if an annuitant sells $100,000 worth of annuities, he would receive $60,000 to $70,000 in cash. However, he would assign rights for the full amount. Once the advance is repaid, payment rights transfer back and the annuitant receives remaining payments.
Are You Really Serious?
Selling annuity payments is a serious financial decision. The process of transferring annuities normally takes three or more months to complete. Prudence must be exercised when selecting a funding source. Do your research diligently to make certain you are working with a reputable and trustworthy investor.
