One of the most commonly understood principles of annuity sales is that once the contract is purchased it is extremely difficult to change your mind. Conventional thinking suggests that in order to sell annuity contracts, you must be willing to take a hit on the account, and will likely lose a considerable amount of money. You may be surprised to know that annuities are easier to sell than they used to be.
Can You Sell Annuities?
Let's start off with the most basic question you are likely asking yourself. Can I really sell my annuity payments? Unexpectedly, the answer is yes. Most annuity owners function under the assumption that once they purchase or inherit an annuity, they are stuck with the annuity for life (or the duration of the contract). And while there is certainly some merit to that statement, particularly in the past, this is no longer the case.
Although it should go without saying, just because you can sell your annuity payments, does not necessarily mean that you should. You'll want to carefully weigh the advantages and disadvantages of selling your annuity for cash long before you commit to do so.
It is also worth noting that this not only applies to structured settlement annuities, but also to your everyday annuity contracts as well (fixed annuities, indexed annuities, etc...). As you are researching how to best sell your contract, it important to specify the type of annuity you currently hold.
How Do You Sell Annuity Payments? What Options Do You Have?
If you are looking to sell an annuity payment, you really have two options. You can attempt to get money back from the issuing company, or you can try and sell the annuity on the secondary market.
The secondary market allows you to sell your annuity settlement for a lump-sum of cash. You can either sell all or a portion of the payment to the annuity buyer. There are many investors that are interested in assuming your annuity payments, and may be looking to either buy annuities at a discount price or are looking for a way to qualify for annuity payments. The secondary marketplace allows the willing seller to come to terms with an interested buyer.
If the secondary market does not interest you, you always have the option of surrendering the contract prematurely. Understand that if you terminate your contract before the completion date, you will be faced with surrender and/or early termination charges from the issuing company. These charges are designed to protect the insurance company's investment in the annuity.
Before you choose either way, make sure that you get multiple quotes from different sources. Talk to your issuing insurance company and see if they are willing to work with you. Because of the secondary market, annuity companies have been forced to ease up on their stringent termination policies.
If you do end up looking to sell annuity settlements, understand that you will not get the full value of your settlement on the secondary market. The appealing thing about buying annuity payments is the possibility of buying the distributions at a discounted rate. If you are concerned about the rate you are getting, you always have the options of only selling a portion of the payments at a time.
Reasons To Sell Annuity Payments?
- Inherited the annuity payments and would prefer the cash
- Have an immediate cash need
- Lump-sum payment can be used in more productive investments
- Prefer a more flexible or liquid product
Where Do You Go For The Secondary Market?
Although this is a growing arena, the secondary market for annuity payments is still quite small. The bigger firms involved in facilitating the sale of annuities are J.G. Wentworth, Peachtree Settlement Funding, Settlement Funding, and Stone Tree Capital. There are certainly smaller firms that also deal in this market, but you have to be more careful regarding their spread on the transactions.