What is an Annuity?
An annuity is a financial instrument which provides either a future stream of monthly payments or several future lump sum payments. Typically an annuity is purchased with a lump sum in exchange for these future payments.
It is important to know what we can and cannot purchase. We can purchase investment annuities also known as fixed annuities that an individual set up outside of work. We cannot purchase retirement annuities that were issued by a previous employer.
Why Sell an Annuity?
The most common reasons for selling are (1) to qualify for Medicaid or medicare, (2) inheritance of an annuity (3) purchase a home and (4) pay for medical expenses. Once an annuity has been set up, the insurance company will not allow it to be changed or expedited or if they do, there are huge penalties. Further, banks will not allow these annuity payments to be used as collateral for a loan.
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How can you sell an Annuity?
If you have an annuity that can be purchased, it is a simple process and very different from a structured settlement transfer. An annuity transfer occurs by irrevocably changing the owner and payee on the annuity to the purchaser. This is done through paperwork from your insurance company. The process usually takes about 4 weeks to complete. No court approval is required.
From our blog: 5 Questions to Ask Before You Sell Your Annuity