3 Reasons Why You Should Sell Your Annuity
If you are currently receiving annuity payments, you may be asking yourself how selling your annuity may be beneficial and under what circumstances you may consider doing so. While regularly scheduled checks in the mail are good, there are several reasons why a big check today may be better. Here are three reasons why you might want to sell your annuity.
Your money is worth more today
The number one reason you will benefit from selling your annuity is that you will receive your money today instead of several years from now. While the initial concept of a structured settlement or annuity had a logical basis, the real world implementation is flawed. In the real world, your money earns other people money that is rightfully yours; in the real world, you wait around for checks that may or may not arrive on time or at all; in the real world, your money is worth less if you receive it at some future date. While the details of the time value of money are somewhat complicated, the basic truth is that the money from your annuity is more valuable today than it will be in the future.
Provide cash when you need it
Another very valid reason people sell their annuities is to deal with a financial crisis that has arisen. This may be a medical problem, educational expenses, or living expenses. Whatever the case may be, selling your annuity puts money in your pocket when you really need it. An annuity takes most of the control away from you and puts it in someone else's hands. Wouldn't you prefer to have access to your money when you want it?
Earn interest on your annuity
Depending on how your annuity is set up and if it is part of a structured settlement, you may be losing valuable interest your money could be earning. If the annuity is set up in an insurance company's name and payments are issued to you, the company may be the one accumulating interest on your money. On the other hand, the annuity may be set up where it is earning sub-prime interest. However, you can sell your annuity and invest it is a more profitable vehicle which you will actually be earning the interest on.
Whatever your circumstances, it is worth it to look into selling your annuity. While it may not be for you, it may very well make perfect financial sense and be one of the best decisions you could make in regards to your money.