3 Ways to Earn Cash for Annuity Payments
Owning an annuity is potentially a very valuable way to provide cash when you need it. While many people are unaware of the full promise of an annuity, there are actually three ways you can earn cash from these investments in addition to just waiting around for checks to come in the mail. Below is a quick look at the options you may have.
Sell Your Annuity
The first and most common way to earn cash for annuity payments is to sell the entire annuity for a lump sum of money. When this happens, you transfer all rights to the annuity payments to a company or individual and in return are cashed out. This is a great option for someone that needs a lump sum of money, although the full amount of the annuity is not typically paid. By buying annuities in such a manner, the buyer makes money and the seller receives cash when they really need it. It is usually a win/win situation.
Sell Part of Your Annuity
Another option, which is a variation of option one, is to sell only a portion of your annuity. This is done in primarily the same manner as selling the entire thing, but in this scenario, you only liquidate part of the money in your annuity. This is a good option for someone that wants to maintain a financial cushion and wants the annuity intact for that purpose. This is often the option utilized for liquidating large annuities; someone may not want a large sum of money when a smaller portion will do. In this case, selling a portion of the annuity is ideal.
Use the Annuity as Collateral
The third and least utilized way to earn cash for annuity payments is to use the annuity as collateral for a loan. Much like a house, car, or certificate of deposit, an annuity is an asset that can be used as security for a loan. In the case that the loan is defaulted on, the annuity then becomes the property of the lender. However, because of the complexity of annuities, using them as collateral is not often done, but, in a crunch, it is also an option.
For the creative individual, there may be many other ways to utilize an annuity to earn money. However, these three are the most often utilized by traditional lenders.