Should You Sell Annuity Payments?

By their nature, annuity contracts are generally irreversible (especially the immediate annuity variety).  Once you sign on the dotted line, you generally can’t cancel the contract even if you haven’t yet begun to receive payments.  However, there is a small, specialized industry dedicated to allowing you to sell annuity payments for a lump sum.

How To Sell Annuity Payments

First off, only contractually-specified annuity payments are eligible for sell.  Variable annuity payments dependent on market performance or some other factor are generally not eligible for the simple reason that it’s impossible to properly value an income stream if you don’t know what it is.

Companies that deal in structured settlement payments (the common name given selling annuity payments) are numerous and easy to find.  The reputable companies will give you a free quote if you provide them the details of your annuity contract.  The entire process reportedly takes about 6-8 weeks on average and shouldn’t be too complicated an ordeal.  Since this is such an obscure market, it’s important to solicit as many quotes from as many different companies as possible in order to get the best deal.

Should You Sell Your Annuity Payments?

The amount you can sell annuity payments for varies greatly depending on the size and length of the payout, current interest rates, and future inflation expectations.  Due to the often fragile emotional state and/or low level of financial literacy of those generally involved (think widows, lottery winners, insurance settlement recipients, etc), structured settlements are fertile stomping grounds for scammers of all sorts.  Should you decide to sell annuity payments, tread carefully.

Similarly, valuing annuity payments is a simple affair if you know the math.  But just how many people either know how to do the math or have the inclination to learn?  Not many, I’d wager.  If somebody approaches you about buying your annuity payments, it’s a safe bet their initial offer isn’t going to be a very attractive one.  It is possible to get a fair deal, however.

Keep in mind that anybody in the market for an annuity will have to offer you less than the present value of your annuity payments in order to turn a profit.  That is, you will have less money in the long run if you sell your annuity.  If you don’t absolutely need the money all at once, selling your annuity probably doesn’t make sense financially.  Think about why you are selling.  Is it because you need fast cash to pay off a medical bill?  Or is it that you want to splurge on something frivolous?  Be sure you aren’t selling your future short in order to live the good life today.