Receiving a structured settlement annuity from a civil lawsuit can be a dream come true for some. Annuities provide you with a guaranteed income stream that can be used to supplement lost wages, to cover ongoing medical expenses and more. However, while others find this payment structure to be ideal, others prefer or even need the funds up-front. The good news is that you may be able to sell your structured settlement annuity for a lump sum amount. Each state has different laws in place regarding the sale of a structured settlement annuity, so you want to begin the sales process by exploring regulations in your state. This will tell you if selling the annuity is an option that is available for you to consider.
Why You May Want to Sell Your Structured Annuity
There are many reasons why individuals may prefer to sell a structured settlement annuity. When you sell a structured settlement annuity, you can typically expect to receive between 65 and 80 percent of the current face value of the annuity, so there is a considerable cost associated with this. However, the benefits of receiving a lump sum payment may exceed the downsides of the sales costs. For example, you could buy a house with cash with the lump sum amount, and this means that you would not be responsible for a mortgage payment potentially for the rest of your life. You could also pay off high interest credit card debt, invest the funds, go back to school, pay off medical expenses and more. In many cases, individuals have more than one goal in mind for the use of funds, so you could improve your life in many ways if you had access to the funds right now.
A Closer Look at the Pros and Cons of Selling Your Structured Settlement Annuity
Before you decide to sell your structured settlement annuity, it is important to carefully review the pros and cons associated with this. When you sell your annuity, you lose the guaranteed income stream that they provide to you. However, if you invest the funds wisely, you may potentially increase your ongoing income stream. Your annuity payments may have a firm end date, but your own investment of the funds could give you an ongoing income stream to enjoy. There are costs associated with selling the annuity, but you may be able to use the lump sum amount to pay down debts. By doing so, the net difference to your budget may be improved with thoughtful and planned use of the lump sum amount.
How to Sell Your Structured Settlement Annuity
If you have decided to sell your structured settlement annuity, you may be wondering what the sales process entails. After you have determined if you are legally permitted to sell your annuity, you should work with your attorney or broker to determine the current face value of your annuity. Then, you can shop around to find a legitimate and honest buyer for your annuity. When shopping around for quotes, review each buyer’s rating with the Better Business Bureau, and ensure that the buyer is licensed to conduct such activities. The buyer who you choose to work with will provide you with specific instructions to finalize the sale, but most will need to see payment stubs for your structured settlement annuity payments as well as tax returns, the court ruling issuing the settlement and other related annuity documents.
The ability to sell your annuity for a lump sum payment can result in a large financial windfall for you. Ensure that you have a thoughtful plan for the use of the funds, such as paying off debts or making smart investments.