Written By : Catherine J. Byerly
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Selling Your Annuity Payments

Can I Sell My Annuity?
Yes, you can sell your annuity payments for cash. In the event your financial needs change and an annuity is no longer meeting your needs, you can sell your current or future payments for a lump sum of cash. Annuities can be sold in portions or in an entirety. If sold all at once, you forfeit receiving all future periodic payments. However if you sell a portion of your payments, you will receive a lump sum of cash up front, and at a later time will be able to resume receiving periodic payments.
Do I Have to Sell All of My Annuity or Can I Sell Just a Portion?
Selling your annuity contract in its entirety provides you with a large one-time lump sum. However, if you need immediate access to cash for a down payment on a house or for unexpected debt, you can choose to sell a portion of your payments. A partial annuity sale allows you to sell a portion of your payments by dollar amount or by time period. For example, you may sell years three through five of a 20-year annuity. During those years, you will not receive your regularly scheduled payments. At the beginning of year six, periodic payments will resume.
What Are the Benefits of Selling My Annuity?
Selling your annuity provides you with an influx of cash that can help to build a better quality of life for you and your family. A lump sum of cash comes with a newfound freedom to invest in other financial options, alleviate debt, and even travel. For more information on ways to maximize on your savings, visit our Investing in Yourself page.
Is It Legal to Sell My Annuity Payments?
As long as your annuity contract is not the result of a lawsuit settlement, it is perfectly legal for you to sell your annuity without the approval of a judge. Sales of structured settlements, on the other hand, require court approval. The judge's role in these transactions is to ensure that selling your settlement payments is in your best interest and will not put you or your family in financial jeopardy. Once the sale has been approved by the court, you and the buyer may move forward with the transaction.

About the Selling Process

How Does Selling My Annuity Work?
Before proceeding with the decision to sell your annuity payments, it is highly recommended that you consult with a financial advisor to evaluate whether this transaction is in your financial best interest.

Selling your annuity involves a number of steps:

• Research annuity buyers for best service.

• Receive a quote.

• Consult with your financial planner.

• Complete and submit required paperwork.

• Receive your money.

For an in-depth view of the annuity selling process, visit our page on how to cash in on your annuity.
How Long Does It Take to Receive a Quote?
Typically, receiving a quote — free of charge — takes only a few minutes but can be completed within a day for more complex sales. Beginning the selling process is simple, and receiving a quote is the first step. Be sure to shop around to a few different annuity buyers for the best quote.
I’ve Sold My Annuity Payments. What Now?
Selling your annuity provides you a lump sum of cash. That leaves you freedom to invest in other financial vehicles, put a down payment on a house, alleviate larger debt, and even pay for school tuition fees. It is also important to remember that selling your entire annuity does not guarantee a full reimbursement of the initial contract value. Annuity buyers will purchase your annuity contract at a discounted rate that can be as low as 50 percent of your initial value. Be sure to discuss all your financial options with a lawyer or financial advisor prior to proceeding with the decision to sell.
How Soon Is Money Disbursed After Selling My Annuity?
The process for selling an annuity generally takes about four weeks. This accounts for the time needed to process the paperwork from the insurance company, which must be completed before your payment is disbursed. If you need immediate cash but are still waiting for your annuity sale payout, some annuity buyers may offer immediate cash advances that can help with outlying expenses.

Types of Payments

What Information Do I Need to Sell My Structured Settlement or Annuity?
You’ll need a copy of your original annuity contract or structured settlement contract from the insurance company that issues your payments. You’ll also need one to two forms of identification with your picture on it. These can include a driver’s license, state ID, birth certificate, Social Security card or passport. Finally, you’ll need your settlement and release agreement. This is the document that you should have received when you accepted your structured settlement. It outlines the terms of your agreement and proves that your case was settled.
Can I Sell My Government Annuity?
A government annuity can mean many things. Social Security and disability are technically government annuities because they are fixed, regular payments. However, Social Security and disability checks cannot be sold. A government annuity may also refer to a pension you receive after retiring from a local, state or federal government position. It might be illegal for you to sell your pension. Many federal pensions can't be sold, and state laws limit the sale of other government pensions. Check to see if selling a government pension is legal in your state.
What If I Received an Annuity Through an Inheritance?
While an annuity may have been a profitable financial option for someone else, regular annuity payments may not be the best decision for you. Inheriting an annuity also requires you to inherit the tax implications. It is possible to sell an inherited annuity in exchange for a lump sum of cash. Selling your future payments can provide you with the option of investing in another profitable venture that better suits your financial needs.
What Type of Payments Can't Be Sold to an Annuity Buyer?
Not every type of annuity can be sold. Some examples of annuities that can’t be sold are payments from a divorce settlement, child support, 401(k) distributions and veteran’s benefits. Social Security and disability payments are also ineligible for sale. In addition, many factoring companies will not purchase workers compensation payments, pensions, variable indexed annuities or company buyouts.

Taxes & Fees

Are There Taxes Involved When Selling an Annuity?
Selling your annuity payment does have tax implications. First and foremost, selling your annuity does not guarantee a full payout equal to the initial value of the contract. In exchange for quick turnaround on cash, annuity buyers will charge a fee and sell your annuity at a discounted rate for profit. The lower the rate, the more money you will receive in a lump sum payout. If you are considering selling your annuity to invest in another financial vehicle, you can essentially rollover your funds into another account in a tax-free exchange. This option bypasses money touching your hands and sets the foundation for another investment account. Be sure to consult your financial advisor to evaluate the best option for you and all corresponding tax liabilities.
What Fees Are Associated with Selling an Annuity?
The primary fee associated with selling an annuity is the discount rate provided by the annuity buyer. In exchange for upfront cash, buyers charge a fee in order to profit from the transaction. The discount rate is determined largely by predicted future interest rates, in addition to other factors. The lower the rate, the more you as the seller will profit from your lump sum payout. The higher the rate, the more you will stray away from your initial contract value. Be sure to consult with your financial advisor prior to making this transaction, and consider shopping around for buyers that will provide with the best bang for your buck.
If I Sell My Annuity, Will I Still Have To Pay Premiums?
Should you decide to sell your entire annuity contract, you are no longer responsible for paying monthly premiums. All responsibilities will be assumed by the new annuitant. However, if you decide to sell a portion of your annuity, you are still responsible for making payments on the contract.
Last Modified: August 10, 2020