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Four Methods:Is Your Annuity Transferable or a Structured Settlement?Evaluating the Worth of Your AnnuityFinding a BuyerPreparing the paperwork

Although an annuity is meant to provide steady income, particularly when you retire, [1] there are circumstances when you might want to find a buyer for your annuity. Some people decide to sell their annuity in order to buy a home, invest in a business, or to cover a sudden emergency situation.

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Method 1 of 4: Is Your Annuity Transferable or a Structured Settlement?

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    Determine if your annuity is transferable. If your annuity is not transferable, then you cannot sell it under any circumstances. (If you need to sell your annuity because you need immediate cash, the best you can do with a nontransferable annuity is list it as an asset or form of income and apply for a regular bank loan.)
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    Determine if your annuity is a structured settlement. Most states have laws that protect people who want to sell their structured annuity. If your state has a Structured Settlement Protection Act, [2] your transaction will have to be approved by a state court (this is to ensure that your best interests are protected.) The Periodic Payment Settlement Act protects claimants, who received a cash sum as a result of personal injury and wrongful death lawsuits, from quickly depleting their assets, and falling on public assistance to meet their needs. [3]

Method 2 of 4: Evaluating the Worth of Your Annuity

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    Evaluate your annuity. Before you shop around for annuity buyers, find out what the resell value of your annuity is. All annuities offer tax-deferral from the time of your initial investment, but your distributions are taxable, so take that into consideration when you are considering selling your annuity.
    • It’s best to seek advice from an expert. Annuities are complex legal documents; if you are fuzzy on the details of your investment and its relative worth, you probably won’t get a fair price for your annuity.

Method 3 of 4: Finding a Buyer

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    Search for an annuity buyer. You can ask your insurance agent for recommendations and you can search online for reputable companies. You can conduct an initial search at no cost:
    • Visit websites that offer to buy annuities. Use their quote form to get a quote from them. You will have to give your name, email address and the name of your annuity, but that’s all the personal information you will have to give in order to get a free quote—and remember the quote is just that; you may not actually receive that amount, or the quote may not disclose the fee that will be deducted from the settlement when the transaction is completed.
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    Try to obtain offers from at least five companies before you decide who to sell your annuity to. If you sell it yourself, you won’t incur any fees, but it is highly advisable to hire a broker to sell your annuity for you. You’ll have to pay a brokerage fee, but a professional can negotiate a good price and make the best deal for you.
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    Understand that the buyer stands to gain. A company that buys your annuity is doing so as an investment. They aren’t in business to do you a favor; they will look at the particulars of your annuity and decide if it is profitable for them to keep your initial investment in the annuity and accrue the interest for themselves. (A fact you should consider as well!)
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    Decide what type of funding you need or want. Investigate the various ways annuity buyouts are made:
    • Straight purchase. The buyer gives you one lump-sum payment for your annuity. You do not collect payments in the future.
    • Partial purchase. The buyer purchases your immediate annuity payments, for example for the next 5 years, and at the end of that time, you once again collect your annuity payments as scheduled. This is a good solution to a one-time cash flow problem—–you get the cash you need, but you still have retirement funding.
    • Reverse purchases. Sell some years of your annuity. Let’s say you are now receiving $1,000 per month for the next 15 years. Sell your payments from years 5 through 10 only. You will get a lump sum for those years, but still receive your current payments up through year 4, no monthly payments in years 5 through 10, but monthly payments resume in years 11 through 15.
    • Split purchases. Sell part of your monthly payment. If you only need $500 a month and your annuity payment is $1,000, sell the portion you don’t need; you will get a lump sum for that and still receive monthly payments of $500.

Method 4 of 4: Preparing the paperwork

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    Gather your paperwork. You will need to have the proper paperwork in order before you can sell your annuity; you must prove it is your annuity and provide copies of:
    • Original annuity application
    • Actual annuity policy
    • Settlement agreement (if applicable)
    • Your most recent disbursement check and tax return (if you are already collecting on your annuity)
    • Valid government-issued photo ID (passport, driver’s license, etc.)
    • Declaration that you are selling your annuity of your own free will
    • Any other documentation the buyer requires, such as a copy of a court judgment (if it is a structured annuity), changes to the initial settlement or copies of any release agreements.
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Tips

  • If at all possible, give the impression that you have all the time in the world to sell your annuity. You don’t want to appear desperate; let the companies you deal with know that you are making casual inquiries. If you appear to be shopping around without rushing, you will be more likely to get better, more competitive offers.

Warnings

  • Never agree to pay any fees to a buyer until the settlement is finished. At that point, all agreed upon court costs, legal fees and commissions should be deducted from the lump sum settlement—you should never pay out of pocket before, during or after the process.
  • Don’t try to sell a structured annuity by yourself, especially if you are living in a state that does not have a structured annuity protection law. Talk to a trusted broker and attorney before you proceed.

Things You’ll Need

  • All documentation pertaining to your annuity

Sources and Citations

  1. ↑ http://www.sec.gov/answers/annuity.htm
  2. ↑ http://www.4structures.com/4structures/front/resources/template/resources_structured-settlement-protection-act.jsp
  3. ↑ http://www.annuity.org/structured-settlements/periodic-payment-settlement-act/

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