When you are facing financial trouble, selling an annuity can be a way out for you.
An annuity is an arrangement with an insurance company that provides you with a regular stream of income. Selling your annuity is possible, but there are a lot of factors to consider. This article provides you with some pros and cons of an annuity sale.
Options for Selling an Annuity
There are different options you can consider before selling an annuity. The best choice will depend on how much financial aid you need.
These are your annuity sales options:
Partial Annuity Sale
Selling an annuity payment partially means you receive a lump-sum payment for a portion of your annuity. This allows you to benefit from the tax arrangements without having to sacrifice your entire future income.
Entirety Annuity Sale
Selling an annuity in its entirety means you will receive a bigger lump-sum payment all at once. But, this prevents you from receiving more payments in the future.
Lump-sum Annuity Sale
This is quite similar to a partial payment, but you will receive a lump-sum payment of a specified amount. For example, if you need $10,000 for a purchase, you can perform a lump-sum sale for that amount.
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Pros of Selling an Annuity
When you are in financial trouble, selling an annuity seems like a simple option. These are some of the benefits you receive from an annuity sale.
Instead of waiting for cash to stream in slowly over the next few years, an annuity sale allows you to immediately receive the money that you need. An annuity sale gets processed over the course of a few weeks.
Ever feel burdened by your debts? By selling your annuity, you can pay off your debts and achieve peace of mind. Especially if you’ve been falling behind on your debt repayments, selling your annuities will be very beneficial.
Cons of Selling an Annuity
Selling an annuity, however, still comes with some drawbacks. Being aware of these cons will help you make the best decision for your finances.
Reduces Future Income
Taking out your annuity payment now means that you will have less security for the future. While it may bail you out from your current predicament, it may be harmful in the future when you don’t have a steady source of income.
Worsens Spending Habits
Having a lot more cash instantly can lead to irrational spending habits. Instead of helping you out financially, this tendency may end up harming you.
Should You Sell Your Annuity?
In general, selling an annuity allows you to receive enough income to help you with current financial issues, but they involve sacrificing future stability. If you are considering an annuity sale, make sure to consult a professional and discover your options. You should also always consider the pros and cons of selling, and whether selling your annuity will truly fit your needs.
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