What is an annuity and what are the different types available to you?
An annuity is a type of income where you receive a certain amount of money from a third party every month. In most cases, this third party is an insurance company. Some people look at annuities as a form of investment. There are two main types of annuities. These are the immediate and the deferred annuity. In a deferred annuity savings plan, the third party or insurance company invests your money for a specific period of time until you are ready to begin receiving fixed withdrawals. Most people prefer to begin making withdrawals when they are close to retire.
On the other hand, an immediate annuity is where you begin to receive your payments a short time after making your first investment. Some people prefer to buy an immediate annuity as they approach the age of retirement. The main difference between these two types is that the deferred annuity normally accumulates the value of cash for you while the immediate one pays out soon after you make your first purchase. The deferred annuity is variable. It is important to note that you can transform your deferred annuity into an immediate one at any point in time so as to begin receiving payments.
Partial vs entire annuity selling options
There are two options for selling your annuity. These options include:
1. Partial sale of annuities
2. Selling your annuities in their entirety
Partial sale of annuities
When you sell a partial portion of your annuities, you will continue to receive income periodically with no loss of benefits in tax. The settlement which you make will continue to carry these advantages. It will even transfer them to the heirs who you name in case you die having not completed collection of all your payments.
Entirety sale of annuities
In this type of annuity sale, you normally empty your investment all at once. This eliminates any chance of further receipt of periodic payment. Thus you do not get any more periodic annuity payments from the third party where you had invested your money. Fortunately, you will have a large sum of money which you can invest in any way you like.
How To begin Selling Annuity Payments
You can sell your annuity to companies which buy annuities for cash. Selling your annuity involves a particular process. The first step of selling annuity payments is to get in touch with a representative from this type of company. This representative will ask you some questions about the nature of your annuity. After that, they will inquire about your financial situation. This is so that they can process the purchase of your annuities. This information will help this company to find a strategy for purchasing your annuities.
After they collect this information from you, they will provide you with some purchasing options. Examples of purchasing options include buying your annuities in their entirety or in portions. After picking a method of buying your annuities, they will collect all the paperwork which is required for the sale. Once they get it, this paperwork will be sent to the insurance company which handles your annuity account. Some of the paperwork documents which will be required include a copy of your annuity agreement which is signed. After that, they will generate a contract indicating that you are selling your annuities to them. These documents are sent to your insurance company. This is so that the company can process the official changes. The annuity purchasing company will then wait for your insurance provider to give approval for the sale. Once they do this, the annuity purchasing company proceeds to deposit the required cash in a bank account of your choice.
Reasons for selling your annuities
You can sell your annuity in case you need some emergency cash. You can also sell them so as to start a business, fund college-level education, pay your debt or facilitate a divorce. You can sell them so as to get a soft landing in case you lose your job. In addition to that, you can sell your annuities so as to pay for medical care or even to make changes in your overall investment portflio. If you inherit an annuity and you prefer a lump sum instead of partial payments, you can sell them. Moreover, you can sell your future annuities if you need money for a downpayment for your house or if you want to use the cash to invest in other assets such as stocks, real estate or even commodities.