Then there’s the tax-deferred annuity. Here you put away money with the hope of having it available to help fund your retirement or some need in the distant future. Yet, if you want to get out of it completely or remove a lot of money early on, you could face steep surrender charges.

So, how can you get your hands on your cash? Sell annuity payments! Annuity owners can use the secondary market to create liquidity from an asset that usually isn’t considered as liquid as, let’s say, a money market fund.

Caution: Not All Annuities Qualify

Just because you own an annuity doesn’t mean you can always sell annuity payments for cash to help you save for the future, invest in a new company or spend it on your kids.

Annuities that are in a tax-qualified retirement plan are ineligible; so, too, are life-only immediate annuities, since the payments are based solely on your life expectancy and are, therefore, not guaranteed.

Before selling annuity payments on the secondary market, take these four cautionary steps:

1.    Contact the company that sold you the annuity. As the industry continues to add more options, you might discover that your annuity has a payout feature you never knew about.

2.    Contact your financial advisory or insurance agent. He or she should be able to explain your options and help you get the best offer on the secondary market.

3.    Think about how much cash you need. You might only have to sell off a portion of your annuity. Then you could let the balance grow tax-deferred or even delay the payments.

4.    Find out how much you will owe in income taxes if you sell annuity payments. Don’t wait until you get the check in hand. By then, it’s too late, and you might end up sending a big chunk of what you just received to the IRS.

If you want to sell annuity payments, finding out the value of your annuity should not cost you anything. Whether you are negotiating cashing your annuity directly with your insurance company or with a buyer in the secondary market, you have to compare at least a few offers before you sell annuity payments. You will be surprised how different their bids are. (And yes, you can approach your insurance company about cashing out. However, do not expect their offer to be the best.)

Sell Annuity Payments: All or Just Some of Your Payments?

The value of your annuity will depend on the number of payments you are selling and the dates of these payments. That’s right – you have the option to sell just some of your future payments. You can even choose the dates of the payments you want to sell. That way, you can receive an immediate lump sum without losing the scheduled payments you wish to keep.

Sell Annuity Payments: You Are Entitled to Get a Free Quote

Always remember that when you get a quote from a buyer, it should be free and non-binding to any action. Walk away from buyers that offer quotes in exchange for something and look for companies (such as Woodbridge Structured Funding and JG Wentworth) that always give free and no-obligation quotes.

Most people buy annuity payments because they are a safe way of saving money while offering benefits related to retirement. You’re guaranteed a periodic payment, as well as, a return on your investment. Furthermore, there are certain tax benefits.

When you purchase annuities, you have different options on the duration of the annuities, as well as the way you receive payments.

Choose an Annuity That Fits Your Needs

In the past, annuities were traditionally bought and paid for on a monthly basis. These days however, you have more options regarding payment frequency. You can buy annuity payments with one large lump sum. Also, most people equate their income to be returned to them month by month as well. However, for a fee, you can also negotiate to get your investment back in one large lump sum as well.

Huge Earners Seek the Security of Annuities

Those who buy annuity payments are those who want to save money for the future, or those who are currently receiving large salaries, but aren’t sure how consistent the salaries will come in. Many professional athletes invest in annuities to make sure that they get monthly payments over their lifetime, so they don’t spend all their money at once and have a monthly stream of income during retirement.

Personal Injury Plaintiffs Receive Structured Settlement Annuities

You may consider buying annuity payments plaintiffs who have been awarded a settlement in a lawsuit. These plaintiffs receive a large sum paid through a structured settlement agreement that allows them to receive annuity payments each month instead of all the money at once. Again, this presents great tax advantages and protection against inflation.

Fixed annuities offer a more secure, more dependable return, though at a lower rate than a variable annuity. Before investing in a certain type of annuity, you should familiarize yourself with the different aspects involved, as well as the risk.

Many businesses buy annuity payments from investors who need lump sum cash. If an investor opts to sell an annuity, prospective buyers offer a bargained endorsement based on the complete current assessment of the contract. If you are thinking of selling all or just a fraction of your annuity payments, there are a lot of things you will have to take into account before you make your decision.

Things You Need To Know Before Selling Annuities

1.     Profits
Companies who buy/ sell annuity payments hope to profit from the transaction. The profit comes out of the annuity payments, so you have to decide what matters more to you: getting a large amount through long-term payment or a somewhat smaller amount in a single immediate payment.

2.     Tax consequences

The usual annuity payments designed to give an injured plaintiff a tremendous tax advantage. It is possible that this advantage may be forfeit if you sell your settlement for a lump sum. Clarify the tax consequences first before selling anything.

3.     Earning capacity

Analyze the stability of your current earning capacity so you can determine if you can cover future finances even without the help of your periodic annuity payments.

Additional Tips Before You Sell Your Annuity

4.     Restrictions

About two thirds of the 51 states restrict structured settlement sales. If you live in one of those states, you may need to get court approval for the transaction. The sale is further complicated if the insurance company that issued the annuity payment is unwilling to cooperate.

5.     Mode of sale

You can customize your mode of sale by taking into account a number of variables such as:

• the fiscal rating of the insurance company making the payments
• the length of time the costs can expand
• the volume of dealt-upon payments

Other variables may further complicate the sale process, so it may be best for you to consult with financial experts before selling your annuity.

6.       Choice of buyer

Also consider offers from many different buyers. Each of their offers will have its own merits and so you’ll have to decide which offer works for your unique financial needs.

7.     Written agreements

Put your agreements in writing to make them legally binding. Make sure that both you and the buyer have a mutual understanding of the sale before signing anything. Consult with a lawyer or financial adviser if there are points that are unclear to you.

Selling Annuity Payments May Seem Complex but it’s Worth it

These tips are just the initial considerations you have to make when selling annuity payments. The sale is such a complex process that it would be impossible to discuss it in just one article.

Don’t be discouraged though – just maintain that desire to learn more, because in the end, the investment is worth the effort!