If you need quick cash for an emergency or a financial crisis you are facing, selling your lump sum annuity might be an option you want to explore. There are plenty of companies online that offer to purchase your lump sum annuity, but unless you are armed with the proper information, you may not receive what your annuity is worth. Here’s the information you’ll need to get the price you deserve and possibly avoid a financial situation.

Pros and Cons of Selling Your Lump Sum Annuity

The first question you need to ask yourself when exploring the option of selling your lump sum annuity is how you’d like to receive your cash. Although a large amount of money (a lump sum) may seem like the right option at first, it’s a good idea to write out the pros and cons of this plan. Selling your lump sum annuity for one set amount can get you a nice amount of cash up front, but keep in mind that once you receive that some, that is the end of your cash flow.

Another option would be to sell your annuity to another party, or transferring the amount to another investor in order to receive a larger monthly payment. You may also want to consider using the annuity as collateral to secure a loan.

Another fact to keep in mind when checking companies for possible payouts or reinvestment options are the fees involved. You’ll need to be aware of all fees involved in the sale as they can add up quickly and affect the payment amount you will receive. Basic rule of thumb, especially when dealing with companies online that seem to promise you more than seems reasonable for your lump sum annuity, is the old quote that says, “If it seems too good to be true, it probably is.” Some unscrupulous companies will promise you a large amount to purchase your lump sum annuity, but the hidden fees will leave you without the amount you had originally agreed upon.

Who is an Ideal Candidate for Selling a Lump Sum Annuity?

Unless you are near retirement age or in desperate need to liquidate your annuity, it’s probably not a good idea to sell your investment. A steady form of monthly income will be missed once the lump sum you receive has been exhausted and you may end up in a more serious financial situation than you are now.

Other prime candidates for receiving a lump sum annuity, which aren’t often discussed, are lottery winners. If you have been lucky enough to win a sizeable amount by playing the lottery, you can choose to receive your payout in the form of a lump sum, or invest the winnings and receive a monthly cash payout. For the rest of us, using an annuity as collateral to receive a loan is often the wisest option.

Only you can decide if selling or trading your annuity is best for your financial situation. Weigh out all your options, write down the pros and cons, and be sure to have a realistic figure that includes all of the fees you will be responsible for.

How to Sell Your Lump Sum Annuity is a post from: Lump Sum Annuity

If you are approaching retirement from your company, and an annuity pension plan was set up for you, there will be some decision making ahead. Now is the time to educate yourself on the pros and cons between a monthly payout or a lump sum annuity. To better understand what you are dealing with, we’ve got a few scenarios for you to consider.

Providing you have acquired a sizable amount for your pension, this is probably one of the most important decisions you will make.

Let’s look at a possible scenario. An individual (let’s say his name is Jack) is about to retire at age 65. Jack’s been with his company for over 30 years and has acquired a nice nest egg. If he takes his pension in a lump sum annuity payment, he’s looking at $470,000.

This sounds like an excellent option, doesn’t it? Jack and his wife can take their lump sum annuity, sell their northern property, pay cash for a home in Florida, and start pursuing their hobbies in the tropical south. Before we get too far in this daydream, let’s take a closer look.

Single Life Annuity Option

If Jack chooses a single life annuity, his monthly income will be just over $2,800 for the rest of his life. This might appear to be a great option, but Jack is married. With a single life annuity, his wife will receive nothing if he should die before her.

Joint and Survivor Annuity Option

Since Jack is married, he should definitely consider a joint and survivor annuity. With a 60% joint and survivor plan, the couple will receive monthly annuity payments of $2,500 for the duration of his life. This is only a $300 difference from the single life annuity option, but the peace of mind is enormous. Jack’s wife will not be left out in the cold should she survive him. With a joint and survivor plan, the surviving spouse will receive monthly annuity payments of $1,500.

Lump Sum Annuity Payout Option

Now that we’ve looked at actual figures from the single life annuity option as well as the joint and survivor annuity option, do we really feel as excited about taking a lump sum annuity? Let’s compare apples to apples and find out:

If Jack chooses the lump sum payout, he will need to earn over 5% annually to generate the same monthly payments ($2,500) for the next 30 years. After this amount of time passes, the funds will have been depleted. Jack will be in his 90′s. If he is still alive, this is a bleak picture indeed, but this scenario assumes that Jack has no other source of income. Let’s say that’s not the case. Jack might have a military pension, a separate 401k plan, investment property, or some other way to sustain his family, at least partially. If so, he might want to consider taking the lump sum annuity.

There are plenty of investment opportunities to take into consideration. Investing your lump sum annuity payout in real estate, a franchise opportunity, business partnership, or stocks are just a few options.

The bottom line here is to get you to see that, number one, you don’t have to make a hasty decision, and number two, you have to weigh out your own personal circumstances and goals. No one can do that for you. What’s right for a family member is not necessarily right for you. Keep checking with us here at our Lump Sum Annuity site. We’re here to answer your questions. Feel free to leave a comment or question and we will get back with you!

Choices in Pension Payouts: Lump Sum Annuity or Monthly Payments? is a post from: Lump Sum Annuity

Retirement is a part of every salaried person and much before his retirement he has to decide about his structured income after retirement. It is here that Lump Sum Annuity comes into picture.

This is how this scheme works. During the tenure of service, it is just and natural that every employee saves some money for his future. He has to invest these savings so that after his retirement, he gets some money every month which he can use for his day to day needs. To encourage the employee to save, some companies have instituted what is called as pension scheme. The employee, instead of investing his amount elsewhere can invest the amount with his employer who in turn would pay him Lump Sum Annuity. This Lump Sum Annuity is paid at a pre fixed percentage every month for the rest of the life of the employee. But the employee has to decide whether to invest with his employer or to withdraw the savings for better investment. Once this decision is taken, it is normally irrevocable.

Normally, the company pays him a predetermined percentage as Lump Sum Annuity. But, this Lump Sum Annuity or pension may diminish in terms of its intrinsic value. This is particularly true when there is inflation. Presuming that the inflation rate is 5% annually, in the next 10 years, the real value of Lump Sum Annuity would have substantially reduced. On the other hand, the investment market may be more favorable and investing in the open market could fetch more benefits than the Lump Sum Annuity. For example, investing in Shares could be more beneficial. But it has an element of risk with it. Unless the person is experienced in the operation of the stock market, this investment is not safe and such persons could opt for Lump Sum Annuity. There are also cases where the employee may find it necessary to withdraw the savings to pay his debts or law suits, medical expenses, etc. Therefore before opting for Lump Sum Annuity, the employee has to think carefully, and he should analyze the pros and cons. It is advisable that he should consult a financial planner.

In addition to this, there are many finance agencies and investment companies including banks who offer Lump Sum Annuity Plan at different rate structure. Some of these plans are also growth investment plans with assured Lump Sum Annuity in addition to some health coverage plans, etc. Some investment plans include payment of Lump Sum Annuity to the spouse or any other nominee either at the same rate or at a revised rate. As an alternative, some retired persons may prefer to invest the bulk in developing real estate property. This type of investment has one advantage; the real value of the property increases and at the same time, with proper planning he can get some returns from the investment made on real estate property if it is leased on monthly rent, etc. The return he gets as rent every month may even be equal to the Lump Sum Annuity which he would get from his employer.

On the part of the employer or the financial agency offering this Lump Sum Annuity, the amount is calculated using the estimates made by a qualified actuary. The actuary calculates taking the average life expectancy, growth rate of funds and many other factors into account before deciding on the Lump Sum Annuity which could be offered to the pensioner.

There is another category of people who are not really dependent on the Lump Sum Annuity for their retired life. Such retired persons may choose lump sum investment plan. In this plan, the person encashes his pension with some investment company. The company will pay a sum which is slightly less than the face value of the pension amount and the difference is the profit for the company. These amounts are normally invested in real estate or in franchise business. But, in this case, the pensioner should ensure that the return on the investment will cover the discount recovered by the company.

In all these investments, a wise decision is all that matters. But many people do not have thorough knowledge of the investment mechanism. They may not be aware of the financial market trend, the health of the financial institutions where investment is proposed to be made, etc. It is here that the role of financial advisers or investment advisers comes into play. They advise the investor on the appropriate investment plan so that the pensioner gets his Lump Sum Annuity or other appropriate investment plan. But it is the financial or investment adviser who can give the right type of advice depending on the need of the investor, his financial propriety, etc.

Lump Sum Annuity is a post from: Lump Sum Annuity