Deciding Whether to SellLottery winnings, structured settlements, and investment annuity payments are intended to guarantee a secure, long-term income stream. For those who won structured settlements through court cases, the scheduled payments are intended to help pay for medical care or replace lost income. Annuities are also used by lottery systems, spreading out payments over a long period of time. And, of course, investment annuities are used to save for retirement.
Each of these annuities can greatly benefit an individual by providing a fixed, predictable amount of income. However, because payments are fixed, you cannot increase the amount received. For many people, having money locked away out of reach in an annuity fund is frustrating, and in the case of sudden financial crises, can leave people destitute even though they own the cash they need.
Your first question then, before you even ask how to sell annuity payments, is whether you should sell at all. There's no simple answer to this question - it depends on your financial responsibilities and needs, your debt, and your personal preferences for handling your money. At Woodbridge, we strongly recommend talking to a financial advisor or lawyer before moving forward with an annuity sale.
Can I Sell My Annuity?Most U.S. states allow the sale of structured settlements, personal annuities, and lottery winnings. Certain types of annuity, however, cannot be sold. These include:
- Child support payments
- Divorce settlements payments
- Pension & 401(k) payments
- Social Security benefits
- Veterans' benefits
- Worker's compensation payments (in most states).
Choosing a BuyerLike deciding what car insurer to select, or what bank to bank with, it's important to research an annuity buyer before making your final decision. A buyer's reputation, track record, and staff expertise will influence how much you receive for your annuity payments, as well as your overall seller experience.
Compare quotes from several different companies. Be cautious if a would-be buyer makes an offer that seems too good to be true, either by quoting a number much higher than other companies or suggesting they can get your money to you immediately. Generally speaking, the process of selling annuities takes six to eight weeks.
How Much Should You Sell?Again, this is a personal decision that only you can make. Some people want to sell their entire settlement to maximize their lump sum payment. Others prefer to only sell a portion of their annuity, so they have a fixed income to fall back on in the future.
In many cases, the more annuity payments put up for sale, the larger the lump sum. You can also choose to sell a portion of the annuity now, and the remainder at some point in the future.
Calculating Lump Sum PaymentsBe aware that the lump sum payment of any annuity sale will always be less than the face value of the remaining payments. Companies use a standard formula to determine the present day value of payments, as opposed to their future worth. You need to balance the extra amount you'd receive if you waited for your annuity payments against your need for cash right now, whether to make investments or pay off debt.
In regards to your lump sum amount, Woodbridge Structured Funding offers a best price guarantee. We will beat any current bona fide offer in writing from a competing structured settlement payment factoring company.
Browse our Frequently Asked Questions (FAQ's), read the glossary of terms or download our whitepaper, What is a Structured Settlement? today to find out what lump sum payments can do for you.