Selling an Annuity

What is an Annuity?

An annuity is an investment option that allows individuals a set income that can be used for retirement. Typically, owners of an annuity purchase them so that they have guaranteed income for a lifetime. Annuities offer this guaranteed income as well as stability.  These are all positive aspects of an annuity, but unfortunately annuities do not offer the flexibility that some owners often require.

Why sell an annuity?

This flexibility is often what annuity owners seek when they decide to sell their annuity. Because annuities lack liquidity, owners of them often choose to sell them in exchange for money they can use immediately. This money may be needed for the same reasons other people need money. Annuity owners may want to buy a house, start a business, or even eliminate debt. Selling an annuity may therefore liquidate some of their funds so that they are able to afford these expenditures.

What to consider before selling an annuity:

Just as you do before selling any other asset, think about the long-term effects before selling an annuity. Ask yourself if you really need the money and if the money would lessen your current financial strain. If it does eliminate current financial pressure, or if investing it differently would be beneficial to your future, selling an annuity may be a smart choice.

Options for selling an annuity payment:

Depending on why you need the money and how much money you need, there are different ways of structuring the sale of your annuity payment, which include:

Straight annuity purchase:
The buyer pays a lump sum of money and the entire annuity is transferred to the buyer.

Partial annuity purchase:
Immediate annuity payments are transferred but future payments are not.

Split annuity purchase:
A portion of the payments is sold and the remainder is received by the seller.

Reverse annuity purchase:
The last year of payments is sold, but the seller keeps the rest of the payments.

Another option

It is also possible to sell only a portion of the annuity payment. This means that the owner keeps the steady income an annuity offers while also obtaining some cash to meet their current financial needs.

What is the process for selling an annuity?

The process that should be used for selling an annuity is a competitive bidding process. During this process, many investors bid against each other for the annuity payment. This allows the owner of the annuity to feel confident that he or she received the best offer for the annuity.

If you have an annuity and are in need of money, contact us. We provide a streamlined process to help you determine if selling your annuity would benefit your financial future.

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