Annuities are a great way to make sure you have income in the future such as when you retire. While annuities are typically paid out according to the insurance contract, another option is to sell your annuity to get funds now. If you’re interested in or planning on selling your annuity, there are a few tips you should keep in mind to ensure you get the most out of your annuity and avoid losing money during the process. Here we cover these tips and include ways to best take advantage of the benefits that come with selling your annuity.
1. Take Time to Prepare
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There are a few things you should do to prepare before selling your annuity. First, you may want to speak with your financial advisor to determine if this is the correct step for you. You will then need to research the companies that will buy your annuity and compare them to determine the best one. You’ll also want to find out if your structured settlement is taxable when you receive it so you can prepare for any potential tax consequences.
2. Know the Different Ways You Can Sell Your Annuity
Another tip to keep in mind is to first be familiar with the various options you have to sell your annuities. The three ways you can sell annuities include a partial annuity sale, a lump sum sale, and an entirety sale. You should fully understand these types of annuity sales and determine which one is most appropriate and beneficial for your needs.
3. Understand the Competition
There are countless purchasing companies who can buy your annuities, but not all companies will offer you a good deal or even good service. Take time to do your homework and find a purchasing company that has good reviews and/or that has recommendations from financial planners and accountants. You can also check the company’s ratings from the Better Business Bureau.
Once you find a few solid buyer options, call each company and speak with their customer service representatives to get more information on your options. You can always request a free quote from the buying companies to compare against other companies’ quotes. It’s recommended that you speak with at least two different structured settlement buyers before making your decision.
4. Ask the right questions
There a few questions you should ask when speaking with a buying company. The most important questions include:
- What time frame can I expect when selling my annuity?
- What type of annuities does your company buy?
- How much of the annuity will I receive when I sell it to your company?
- Does your company belong to the National Association of Settlement Purchasers (NASP)?
- What is your approval rate?
- Are there any legal fees I’ll be required to pay?
- Will you require me to sell all of my annuity or can I sell only a portion?
The more you know when going into the annuity selling process, the better you’ll be able to reap the many benefits that can come from this decision. These tips should help you get started and ensure you’re prepared when speaking with potential buyers.
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