What Is an Annuity?

Many Americans use annuities as financial planning tools to help finance a comfortable retirement or provide for their family after an insurance settlement.

An annuity is an investment option insurance companies and financial institutions issue that ensure financial stability and a consistent income stream over a set period of time. Annuity owners exchange their money for a guarantee on their investment years down the line. Unlike some retirement accounts, there is no limit on the amount a person can contribute to this investment account. The money contributed to the annuity will grow over time, and owners will receive designated payments set in the contract terms.

Rather than waiting years to receive annuity payments, account owners may request a full or partial lump sum of their investment to finance home repairs, debt or other life events. In order to receive immediate payment, annuity owners will have to sell their annuity to a qualified insurance company. However, if they decide to sell annuity payments, owners are selling the rights to some or all of their future periodic payments.

Annuity payments may result from:

  • a large, paid-up life insurance policy
  • a retirement account
  • an insurance settlement
  • a structured settlement from a successful lawsuit
  • a trust fund

There are several different types of payments — some provide a guaranteed income for life, while others are for a specified period. Sometimes life changes may require you to access your money now in a cash, lump sum payment instead of waiting for your smaller, periodic payments.

Fortunately, CBC Settlement Funding can provide you with cash in exchange for selling some or all of your future payments rights. By selling your future payments in exchange for an immediate large cash lump sum, you can better meet your current financial needs.

About Annuity Payouts

Selling annuity payments, also known as an “annuity transfer,” is an exchange of your steady stream of periodic payments for one large lump sum of cash immediately. Account owners may sell their annuity in its entirety, or in a partial sale, but will have to pay interest for the quick turnaround. For that reason, the lump sum will be less than the total you would have received by the end of the payment period. Other reasons the lump sum payment may fall below its original value include:

  • Total amount of payment being sold
  • Current interest rates
  • Inflation rates
  • How much money has already been disbursed

Reasons to Sell Your Annuity

There are several good reasons to sell your annuity for a lump sum of cash. If faced with sudden, unexpected expenses, it makes sense to seek an annuity payout to help alleviate debt. Other reasons for selling some or all of your payments include:

  • Seizing an investment opportunity
  • Funding an education
  • Paying for surgery or other medical bills
  • Repairing or remodeling a home
  • Loss of employment

The Annuity Sale Process

Selling an annuity is a simple process. Almost all states have laws in place asserting your legal right to transfer your payments to another person or business entity. The sale process includes a few steps:

  1. Ask for Price Quotes – Annuity purchasing companies should offer price quotes with a low discount rate. CBC Settlement Funding always provides competitive price quotes with no strings attached.
  2. Choose a Buyer – Look for a buyer who has positive reviews online and is accredited with multiple associations. CBC Settlement Funding has an A+ rating from the Better Business Bureau.
  3. File Paperwork – Whether you are selling a single premium investment annuity or a structured settlement, CBC only requires a copy of the contract or settlement, and personal identification documents to get started.
  4. Get Judicial Approval – Selling an annuity is a legal process. The legal staff at CBC will deal with all court filings and appearances on your behalf.

Prior to selling annuity payments, it’s important to vet potential buyers to confirm credibility. Be sure to look for red flags that could affect the quality of your transaction and experience, including:

  • A lack of accreditations with professional organizations
  • High-pressure sales tactics
  • Low ratings with groups like the Better Business Bureau
  • Poor ratings on websites like Yelp
  • Aggressive sales tactics

Annuities FAQs

Are My Annuity Payments Safe & Guaranteed?

Unlike savings and checking accounts, your annuity is not insured by the FDIC, even if the annuity was purchased at a bank. If your annuity is with a top rated insurer that has an A+ rating you should be safe but sometimes insurers do become insolvent. Typically the policies are protected by the guaranty association in your state. Additionally, other insurance companies may directly inject funds to avoid or reduce reduction in scheduled benefit payments.

If I Received My Annuity As a Gift or Inheritance, Can I Still Sell It?

Because an annuity is an asset, it can be left to heirs named in a will. Some examples:

- A large, paid-up life insurance policy or annuity policy
- A retirement account
- An intellectual property agreement
- A trust fund or other inheritance

These are normally paid out in installments over time. If the payments are still in force at the time of the beneficiary’s death, they may be passed on to family members. However, while the annuity or structured payment arrangement may have been appropriate for the original beneficiary, it may not necessarily fit with your current situation or financial objectives. As a result, you may decide to sell the annuity.

As the legal owner of the annuity payments, you have the same legal rights to sell your annuity as if you were the original beneficiary. By getting an annuity payout, as opposed to structured payments over an extended period of time, you will have more flexibility, particularly if you wish to start a business or purchase a home without incurring debt or take advantage of a time-sensitive investment opportunity.

What If A Family Member Passes Away Without Receiving Their Remaining Annuity Payments?

It depends on the wording in your family member’s structured settlement agreement. Sometimes the periodic payments end when a person dies, sometimes they are guaranteed for a certain period of time. In this case, the designated beneficiary becomes the payee of remaining guaranteed structured settlement payments.

The beneficiary can continue to receive the periodic payments or sell them for a cash lump sum payment. They also have the option of selling a portion of the payments for cash and keeping the remaining payments. This can come in handy if you have an immediate need for cash to pay off debts or funeral costs. Of course, you can sell all of your future payments for a large amount and reinvest part of the lump sum in more liquid assets.

Let CBC Help

At CBC Settlement Funding, our staff will take care of the legal filings and process the paperwork for you to ensure a worry-free transaction. Consult with CBS Settlement Funding today to discuss your selling and disbursement options.