Well, there is nothing new in cashing out payments from your annuity or any structured settlements. You can withdraw the money any time and that withdrawal is termed as fast cash. Fast cash is the amount that you get any time from the annuity even before the payout period has started. But this withdrawal will cost some of the amounts from your annuity. It could be around 10% of the amount you are withdrawing. This is the kind of loss you will face in case of withdrawal of money early.
Timing is a big factor in choosing when to tap into your annuity money. Depending on when you purchased it, it might make sense to withdraw funds from your annuity, assuming your contract allows this. If you purchased your annuity recently, selling future payments may be a wiser choice.
Annuities can be sold and bought anytime but some surrender charges would be paid though. However, this is not the case with structured settlements, one cannot sell it or withdraw money through it. But what they can do is ask the company to give them pre-settlement payments so that they can pay some bills.
Annuities are basically a reliable stream of cash for a period of time. These annuities actually help in fulfilling the need for money to support a living. Your financial needs can change or any new situation may arise which requires you to pull out the money from the annuity or restructure an existing one.
This is where a fast cash solution comes into play. You do not have to take all of the annuity out. You can request the company to reduce your payouts which will affect the future sum but you will be able to have some money in your hand now.
Early withdrawals usually come with expensive tax implications and surrender fees. Penalties tend to decrease over time, so if you wait several years, you may face lower fees.
Reasons for selling annuity
There could be multiple reasons which might compel you to sell the annuity. I have mentioned some of the reasons below for your understanding.
- Job loss
- Medical emergency
- Lifestyle change
- Annuity inheritance
There might come a point where you are not able to get cash instantly. At that point, you can sell your payments in advance to people with some extra interest rate. This will help you to get money in time and also pay people in the future without any stress and keeping your annuity safe.
How to get cash from annuity or structured settlement?
Rather than waiting years to receive their payments, some people choose to sell their long-term income products.
There’s a short but set process for doing this:
Research Annuity Purchasers
Start the process by looking for the right annuity buyer. Make sure you are aware of all the fraud and unethical practices. Always go for the trustworthy annuity buyers who can pay you money directly into your account. Moreover, these trustworthy annuity buyers will have positive reviews and you can get timely quotes from them.
Get a Quote
When you get a quote always check that it has a low discount rate so that you get to keep as much money as possible in your annuity account. The average discount rate is 12 percent. The current value of your annuity depends on certain factors, such as the size and frequency of your payments.
Submit Your Paperwork
After receiving the quote, complete all the paperwork and then allow the buyers to access the annuity contracts. Provide everything that is needed at the moment, from your identification to tax forms to other documentation.
Present Your Case Before a Judge
If you’re selling a structured settlement, there is one more step. A brief hearing to obtain court approval of your transfer must take place. Federal and state laws have this safeguard in place to ensure all the details of your transaction are fully disclosed and to make sure the sale is in your best interests.
Get fast cash without giving up all future payments
When it comes to selling your annuity, you have options. You can sell the whole thing, or you can sell them right to some of your future payments.
Selling a portion of your annuity is generally done by either forfeiting payments for a set time period, say one to three years, or selling a specific dollar amount for a lump sum.
A partial is a different concept which means that you can sell few years of your annuity, for example, the first three years. You can then use this money to pay as the down payment for your retirement home or any other emergency.
For that time period, your payments will stop. Once three years have passed, you will begin receiving regular payments.
You may also elect to sell a portion of your annuity payments. For example, if your payments are $5,000 a month, you may sell half or $2500 a month, and continue to receive the rest of the payments.
A lump-sum sale is about selling the exact amount of annuity instead of a set of periods. For example, you can sell the $20,000 instead of selling the annuity for the three years.
For the partial and lump-sum options, the annuity retains a cash value. For example again at some point in time, you feel like you need money, you can again contact the company to sell a few more amounts of your money and you will get that sum directly. In this way, you will know how much amount you have withdrawn from your annuity instead of the time period.