The option to sell off your annuity in exchange for cash is something that can look rather enticing to a person that is wrapped up in an annuity. It is enticing because the concept of getting cash for annuity could be of great assistance for a person faced with needing to come up with a large sum of money in a relatively narrow window of time. Some of the scenarios in which a large amount of cash may be needed include:
- The down payment for a home
- Investment of a business venture
- Unpaid medical bills stemming from an unforeseen incident
- Massive debt amounts incurred from student loans or credit cards
If you are a person that is in a bit of a financial bind, receiving cash for annuity sounds like a tremendous deal. However, before you go down that road, it is in your best interest to take a good look as to how the process of getting cash for annuity works.
It Starts with You
Before you even think about getting cash for annuity, it is crucial that you pore over your annuity contract to get familiar with all of its details. If you do not have an intimate knowledge of all of fine print that is involved in the annuity contract, you may end up not getting as much bang for your annuity buck as you may otherwise receive.
Also, as you look over your contract, if there is anything involved in the paperwork that makes you scratch your head even ever so slightly, don’t play a guessing game. Consult with a financial expert or advisor to ensure that you are not misinterpreting something. Finding out too late that you misunderstood part of your contract could have devastating consequences.
When you are ready to start seeking a secondary buyer willing to give you cash for annuity, you should take the time to understand the process in its entirety. Primarily, you need to be cognizant of the fact that if you are receiving cash for annuity, you are giving up your right to receive future structured payments. The only exception to this would be if you were to forego the notion of selling your annuity in full and selling only part of your annuity.
Finally, you should be aware that you will not be receiving the full amount of your annuity by going the cash for annuity route. Typically, you will be receiving anywhere between 60% and 85% of your annuity amount.
Take the Time
Because of the various complexities that exist in cash for annuity situations, it is imperative that you take a significant amount of time and research the entire process from beginning to end. Take a look at the secondary buyers that are vying for your business and see how they can help you retain the most cash for your annuity. Analyze your own situation to see just how much money from your annuity is needed in order to cover your expenses. Make sure you understand the ramifications of the process. Remember, it is your money; that alone should be enough motivation to ensure you go about this process in the smartest way possible.
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