If you have had an annuity left to you in a will or something like that you may have some decisions ahead of you that you were not even aware of. You don’t have to settle for the yearly amount that you will receive every year for the rest of your life, which is what annuity generally is. If you prefer, you could sell it and get cash for a structured settlement. Cash for annuity can be very beneficial to you, depending on your situation and what you plan to do with your money. If you are planning on getting out of debt or paying ahead in monthly expenses or something like that, then having a lump sum to do what you wish with would be much better than having smaller amounts given to you over a designated period of time. Smaller amounts are nice if you are building a savings for nothing in particular but the truth is, not many people have absolutely nothing that they need to pay for.
Types of Settlement Sales
There are three ways that you could go about selling your annuity: partial sale, entire sale and lump sum.
- Partial Sale
This is a very relaxed structured settlement selling method. The seller can trade pending settlements for immediate cash but also continue to receive the smaller amounts periodically. This happens when the seller does not sell the entire annuity but only part of it. The unsold portion will still be paid out as settlement payments. These gives the benefit of the ‘best of both worlds.’
- Entire Sale
Now that you understand partial sale, it’s pretty simple to explain entire sale. This is when the seller gives up all annuity payments in exchange for cash. They will receive the entire amount at once without receiving payments anymore.
- Lump Sum
This is more similar to a partial selling plan. The seller can sell their annuity in exchange for larger lump sum amounts over a shorter period of time than previously agreed upon.
Pros of Selling at all
Paying off Debt – If you are in a high amount of debt, it almost seems pointless to pay it in small amounts. By the time you can pay again, the interest will have raised the amount back to where it was to begin with. If you can, it’s better to pay it off all in one go in order to avoid the interest rates that come along with expensive debt.
Of course there are cons to selling payments, such as the fees that are incurred by doing so. You may end up receiving a smaller amount in a lump sum than you would if you have waited on the yearly payments. However, if yearly payments aren’t going to work for you then it may be worth the smaller amount if it still covers whatever it is that you need to pay for.