The Basics You Have to Know in Selling Annuities
A huge emergency had just happened in your household and you are in
immediate need of huge amount of cash. The only thing you have that could
resolve your liquidity problems is your annuity plan. No doubt that the
obvious solution to your problem is to sell your annuities, right? In
this situation, you do not really have much of a choice.
Selling them would help you a great deal even if you do not get the
amount your annuity is really worth. However, if you are just tired of
paying out your annuity plan and you just want to get rid of it, or you
are just impatient to get your hands on your cash, or you are
anticipating a large expenditure in the near future, it pays to think it
over a hundred times. It is a fact that many people do not really know or
fully understand our policies and contracts about insurances and
This is why there are a lot of fake companies out there that take
advantage of people ignorant of their rights and of the worth of their
annuity plans. Companies that pay much lesser than what these people
deserve and take much longer to issue payment if they ever do.
So to guard yourself against such predators, you should arm yourself at
least with the basics. You should at least understand the basics of your
annuity plan, the things you have to consider and the right questions you
should ask before selling your annuity.
First, consider your type of plan. There are various kinds of annuities
and your selling decisions should be based on them. Each type of annuity
works in differently from each other. There are two main types of annuity
and they are fixed annuity and variable annuity. Fixed annuities are
those that pay a fixed rate of return while variable annuities are those
that allow the plan holders to invest in stocks and bonds.
Hence, the rate of return in variable annuities differs depending on the
investment’s progress and the economic state of the market. However,
these two sometimes branch out to other different types according to
payments and other terms.
Other forms or the sub-forms of annuity come in as deferred annuity and
immediate annuity. Deferred annuity gives you a guaranty that your
investment would increase in value and you can sell it when you need
income from it. On the other hand, immediate annuity enables you to
liquidate your investment within a short time after purchasing the plan
in a lump sum payment. The best thing about this plan is having the
choice of life income with a refund payout. This ensures that the full
value of your contract would be paid by passing the payments on to your
Now, the next thing you should consider is whether selling your annuity
plan would truly benefit you or holding on to it a while longer would
provide more benefits later. First basis on selling your annuity are the
two main types of annuities—fixed and variable.
If your annuity is a fixed annuity, holding on to it until before you
retire is the best option. This annuity provides a stable income source
for the rest of your life after you retire. After all, that is the very
reason why you availed of annuity in the first place—security.
However, the rate of return in this plan is not assured to keep up with
the inflation rate. So if you really want to sell it, the best time is
before you retire.
Now if your annuity is a variable annuity, you also have to consider the
timing in selling it. Remember that this plan does not guarantee a good
rate of return, so selling it must be timed with the market performance.
Sometimes, selling it an earlier time would prove beneficial than selling
it a later when the market is down and you really need the money. This
would put you in a situation when you don’t have much of a choice but
sell it at a lesser value.