You receive annuity income and want part of it as cash now. We check what your contract allows, price the payments with competing buyers, and show the discount rate behind every offer.
Four ways annuity holders give up more than they need to.
Every offer comes with the rate and the math.
| Monthly payment | $2,000 |
|---|---|
| Guaranteed payments left | 120 |
| Total of payments | $240,000 |
| Buyer's discount rate | 9.0% |
| Lump sum before costs | $157,883 |
| Discount from total | 34.2% |
| Our fee | built into the price |
| Sell all 120 payments | Sell the next 60 | Keep them | |
|---|---|---|---|
| Cash today | $157,883 | $96,347 | $0 |
| Payments still coming to you | None | 60 payments of $2,000 | 120 payments of $2,000 |
| Total you receive | $157,883 | $216,347 | $240,000 |
| What you give up | Every future payment | The next five years | A lump sum now |
Illustrative example: $2,000 a month guaranteed, at a 9% discount rate, before legal and transfer costs. Totals add up the payments as scheduled and are not adjusted for the value of money over time.
The annuity contractA recent payment statementThe insurer's contact detailsNames of any joint annuitant or beneficiaryAn annuity is a contract with an insurance company that pays income, either for a set number of years or for life. When people ask about selling annuity payments, they usually hold one of two kinds, and the route to cash is different for each.
For a fuller explanation of both markets, read how annuity sales work.
The owner of the contract, or the payee on a settlement annuity, is the person who signs. Several things decide whether a buyer can take the payments:
The quickest first step is a call to the insurer to ask what the contract permits: surrender, withdrawals, assignment of payments. That one call can save weeks.
If your annuity has not started paying out, it may still have a cash value. A partial withdrawal, often up to a set percentage each year without a surrender charge, or a full surrender after the charge period ends, can cost far less than selling payments at a discount. We will ask about this before we price anything, because selling the payments is only worth it when the insurer’s own routes are closed or expensive.
Once a contract has been annuitized, meaning converted into a fixed stream of payments, there is usually no surrender value left. That is the point at which a buyer for the payments becomes the main option.
A period-certain annuity pays for a fixed number of years whether or not the annuitant is alive. A life annuity stops at death. Buyers like the first and are wary of the second. On a life annuity, a buyer may price only the guaranteed portion, ask for medical records, or require life insurance on the annuitant, and each of those lowers the cash you receive.
A personal annuity sale moves at the speed of the insurer’s paperwork: confirming the contract terms, any consents, and the change of payee. A settlement annuity adds the court hearing. We cannot promise a closing date, and we will tell you what is holding a file up when something is.
Money taken from an annuity is often taxed as ordinary income, and withdrawals before age 59 and a half can carry an extra federal penalty. How a sale of payments is taxed depends on the contract and your situation, so get advice before you sign.
For many retirees the annuity is the steady income under everything else. If the payments cover your basic bills, if a penalty-free withdrawal would meet the need, or if a surrender charge plus a buyer’s discount plus legal costs would take too large a share, keep the annuity. That is a perfectly good outcome of asking for a quote.
If selling does make sense, consider selling only the next few years and keeping the rest. Compare every offer on its discount rate and the net cash after costs, using the checklist in how to compare offers.
No. Many contracts restrict assigning payments, and some insurers will not change the payee. The first step is to ask the insurer what your contract permits, and we can help you frame that question.
If your annuity still has a cash value, a penalty-free withdrawal or a surrender after the charge period is often cheaper than selling payments at a discount. Selling makes most sense once the contract has been annuitized and those routes are closed.
It can sometimes be sold, but the buyer bears the risk that payments stop at death. Expect a lower price, a request for medical records, or a sale limited to the guaranteed years.
No. You do not own that contract, and a sale needs a court order under your state's transfer act. Our page on structured settlement payments covers that process.
Often, as ordinary income, and withdrawals before age 59 and a half can carry an extra federal penalty. The answer depends on the contract and where it is held, so ask a tax adviser first.