Selling Annuity Payments Or Keeping Annnuity For Retirement

 Selling Your Annuity To Cover Unforeseen Expenses

Selling Your Annuity

In simple terms, an annuity is a fixed some of money paid to someone yearly. This is why it is called an annuity, comes from annual which means yearly. Many people across USA and Europe use annuity payments to plan for their retirement. There are basically two types of annuity; differed and immediate.

• With differed annuity, an investor makes his lump investment and that is invested for a specific time period stipulated until the investor is ready to receive his payments. 
• With Immediate Annuity, you will start  receiving payments soon after you make your initial investment.

But there are many of us who probably need cash now to cover some sort of heavy expense and we simply cannot find the immediate cash to cover those expenses. Situations do arise, and some of them are not so fortunate. Money is a very needed commodity and if it is possible to finance your expense without taking out a loan, it is much better to do so. One option many people look at when needing immediate cash to cover expenses is to sell their annuity payments.  You can easily send your annuity payment and get cash in your hands while still maintain a portion of that annuity to receive for retirement purposes. So what are the steps in selling your annuity, it is quite simple, lets take a look.

Decide how much annuity you will sell

• Take a look at your expense which you need the money for, take a look at your annuity payment and then decide how much of your annuity you wish to sell.

Speak to a Lawyer

• When doing transactions like these, it is always good to get the help of prefessional people. Speak with your lawyer and let him guide the process of selling your annuity.

Review the company you are selling to

• Don't just say i have a lawyer and he is working on it. You need to ensure that the company you are doing business with is reputable, meaning, they will not sucker you out of your money. Remember selling your annuity is receiving a lesser amount of money for the value of your money! Yes, companies are buying annuities to make a profit, not as good Samaritans to help you in your financial disasters.

Remember that selling your annuity is a financial transaction and all supporting documents must be verified and approved. It may take a couple of days or weeks for the transaction to be fully completed. One everything is smooth, you can expect to receive your sale from annuity in your bank account or check in the mail.

Here are some companies which may buy your annuity

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Life Insurance Split Annuity

Life insurance is not only a protection for your loved ones but also an investment. Annuities provide you with the possibility to obtain a source of income from a life insurance special contract by paying an insurance premium or premiums. That way within a single insurance policy the insurer protects himself by getting a possible source of funds in the event problems arise and his or her loved ones in case he or she dies.

A good example of a life insurance annuity contract uses would be: the taker pays a premium of $20,000 and in return at a certain date starts receiving $300 each month until he or she dies, $2000 for 15 years or death benefits if the insured dies prior the term of the annuity ends. Annuities have two well differentiated time periods: the first period where the insured pays the premium or premiums and the second one when the insurance company pays out the agreed amounts.

What Is An Annuity?
An annuity is an agreement by means of which you receive cash payments from the insurance company or tax-deferred retirement income apart from the insurance payment in case of death that your loved ones will receive. There are different types of annuities each one with its particularities. These contracts can adapt to your personal situation thanks to the aforementioned differences.
For instance, if you are interested in investing you will be purchasing tax-deferred annuities that will mature with time. But if you are close to the time on your life when you are thinking about retirement you may be interested in obtaining a regular and secure income and thus opt for immediate annuities rather than tax-deferred annuities. As you can see, annuities are quite flexible and cover many different situations. There are also college annuities, charitable annuities, and the ones we are interested in: split annuities.

What Is a SPLIT Annuity
 Split annuities combine immediate annuities with deferred annuities. This combination provides a bit of the benefits of both types and thus is useful for those who are interested in investing but still want to secure their future with a source of regular income at the time of retirement. Therefore with a split annuity you get an immediate and regular stream of cash for a period of time chosen by you which is the payment of principal plus interests of a portion of the premium paid. The rest of the money grows by accumulating the interests till it eventually reaches the original amount.

Example Of a SPLIT ANNUITY
Here is an example of what a split annuity can provide to you. Let's say you contribute with $200,000 to a split annuity that is divided evenly: 50% to each portion of the annuity. The half that is deferred will accumulate interests that add up to the principal every year. The other half starts providing you an immediate income that consists on the principal plus an interest rate. Let's say the immediate part period equals 10 years, you will receive almost $1420 a month (minus taxes). When the period ends, the other half will be close to reaching the original amount of the split annuity and you could start again.

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Immediate vs Differed Annuity

Do you want income now or income later?
When you purchase an annuity, you can choose between an immediate annuity - if you want the income right away - or a deferred annuity - if you want the opportunity to build your account value over time and convert it to income in the future.

Immediate Annuity
When you purchase an immediate annuity, you make a single lump-sum payment and set the starting date for the payout to begin sometime within 13 months. The term and the amount you'll receive are determined by the annuity contract.
With an immediate annuity, you control the term: You can choose income for your lifetime (known as a life annuity) or for your lifetime and that of another person (known as a joint and survivor annuity). You can also add a guarantee period to a lifetime income payout option, under which your beneficiaries will receive the payments remaining in the guarantee period should you die before the end of the period. You can also choose between time-specific or amount-specific payout possibilities.
What You Receive:
The size of the monthly payment you'll receive, on the other hand, is set by the annuity provider based on:
* How much you invest in the annuity (annuity principal)
* The payout option chosen
* Whether you have chosen a fixed annuity or variable annuity
Note: Some variable annuity contracts may permit you to choose between receiving annuity payments that are fixed in amount or annuity payments that vary based on the performance of the underlying investment subaccounts.
* Personal factors, including your age and, if it's a joint and survivor annuity, the age of the other person

The Immediate Advantage:
There are certain advantages offered by an immediate annuity that can make it an attractive choice for retirement income.
Principally, an immediate annuity can help ease the concerns people may have about managing a diversified investment portfolio or, even more frightening, of outliving their assets.
As an example, someone who has just received a large sum of money--an inheritance, a bonus, or profits from selling a home or a business--but really needs a steady source of income can choose an immediate annuity. Also, many experts suggest that anyone who expects a lump sum pension or 401(k) distribution might consider an immediate annuity as a way to convert their funds into a stream of income they can't outlive.

How to Choose a Contract:
The primary reason that many people used to choose a fixed immediate annuity was for the guaranteed annuity payments it promised. However more recently, low interest rates and the potential for strong equity performance have created an increased interest in variable immediate annuities.
Because the guarantee of principal and return of a fixed annuity is based on the claims paying ability of the insurer, the reason to choose a fixed immediate annuity usually comes down to which highly-rated fixed annuity company provider will guarantee the largest regular income for the term selected. However, income amounts vary because each fixed annuity company may use different annuity purchase rates for determining the annuity payments they make.
As an example, a 55-year-old widow who buys a $100,000 immediate annuity, and elects to receive monthly annuity payments for the rest of her life, might receive anywhere from $611 to $766 each month depending on the fixed annuity company provider. If she lived for 35 years--to age 90--the difference could amount to more than $65,000.

In choosing a variable immediate annuity, most annuity contracts allow you to choose to have your annuity payments last for a set period of time (such as 20 years) or for an indefinite period (such as your lifetime). During payout your contract may allow you to choose between receiving annuity payments that are fixed in amount or annuity payments that vary based on the performance of the underlying investment subaccounts. There are many factors to take into account, including the potential performance of the investment portfolios in the contracts being considered, the options offered, the annual expenses of the contracts and whether or not you are willing to take the risk that your account may decrease if the underlying investments perform badly. Our planners and financial specialists can provide assistance to evaluate the alternativesand determine what would work best for your personal investment plan.
When you purchase an annuity, you can choose between immediate annuities - if you want the income right away - or deferred annuities - if you want the opportunity to build your account value over time and convert it to income in the future.

Deferred Annuities:
A deferred annuity gives a person the opportunity to build their retirement savings over a number of years. What is being deferred is when the income is received. But in the period between signing the contract and converting the accumulated assets to a revenue stream, the deferred annuities investment has the opportunity to grow in either a fixed account, variable sub-accounts (investment portfolios--depending on investment performance), or both.
Unlike immediate annuities, which can only be purchased with a lump-sum, deferred annuities can be purchased with both a lump sum and or a series of payments. The ability to combine one-time and periodic contributions gives added flexibility in building a retirement annuities account.
In most cases, there is still limited access to the funds in a deferred annuities account until those accumulated assets are converted to a revenue stream. This means there can be some annual withdrawals, or surrender the contract entirely, getting back its then-current value minus any surrender fees. But if there are withdrawals, the money will be gone, and the retirement annuities account will be reduced. There may also be a 10% tax penalty prior to age 59½.

It Can Pay to Wait:
Deferred annuities are especially appealing if a person has "maxed out" their employer's salary-reduction plan but wants to put away more for their retirement. And if a person isn't earning income, deferred annuities are one way for potential earnings on the investments to grow tax deferred.
Unlike employer-sponsored plans and IRA's, there are no annual limits to the amount that can be contributed to non-qualified deferred annuities; therefore more can be contributed when more is available, for example as the result of a big bonus or other windfall.

Russell Hill writes articles for a variety of subjects including fixed annuities, variable annuities, indexed annuities and other retirement investment vehicles.

Article Source: http://EzineArticles.com/447642

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How To Calculate Annuity Payment

How To Calculate Annuity

When an employee retires, the employer offers monetary retirement benefits such as pension and cash balance plan, as a gesture of gratitude for the employee’s service.

Many people like to invest their retirement package in an insurance company, on the condition that their money is paid to them back on a regular basis. They `buy’ this arrangement, known as an `Annuity,’ from the insurance company. By going in for an annuity, the investor is assured of a regular income through retirement, or thereafter to his heirs. But this income, usually monthly, is based on the payment option that he chooses. 

Though an annuity offers a regular monthly income to the investor, it cannot meet his immediate financial needs, like buying a home. In such circumstances people think, \"Which is better, receiving a large amount of money today after paying taxes, or receiving an annuity as monthly payments for many years and paying taxes each year?” Let’s sort the dilemma out by considering an example as follows. 

James wins $1 million in a lottery. The lottery company asks him to choose from the two options: a lump sum payment once, or annual payments of $75,000 for 30 years. Let the rate of income tax be 30%. If he chooses the first, his after-tax amount is $700,000. If he chooses the second, receiving $75,000 every year for 30 years, its income is far less considering inflation, tax and other unpredictable factors for the 30 years period. Obviously, the first option is better.Accredited banks, insurance firms and finance companies and their websites have ready online annuity calculators to help investors make a good choice.

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Useful Tips To Sell Your Annuity

 

Sell Annuity

Do you have an annuity to sell? To sell annuity requires some research and information so that you can make the best decision. It takes some time to go through the entire sell process. Here are some tips to give you an idea about selling your financial annuity.


If you are in desperate need of cash and you have an annuity, you might as well sell your annuity. An annuity is a financial contract that may have been issued to you by another individual, company, or company as a result of favorable verdict of a lawsuit.

Generally, the annuity is payable in many ways. However, instead of receiving outright one-time cash as compensation of a lawsuit or from an insurance company, the payments are made in increments.  It can be paid twice a year for a number of years or it can be paid 4 times a year for a number of years. Either way, the good thing about annuity is your privilege to arrange the terms of payment.

Now, in some ways the annuity is beneficial as it can be a good source of financial resources for you for a certain period of time. You can use the money to finance a college education for your children and more. Nonetheless, on the other side, it can be a source of disappointment especially if you have anticipated so much for this lump sum to finance a new car or house.

If such is the case, then you can sell your annuity. You have to understand that even before you have been rewarded with an annuity, there were already several companies wooing you to sell your annuity. Of course, not everyone is interested in selling, as it can provide an effective financial security.

If you have been approached by a financial company or want to approach one, you have to know several things. First of all, the amount of lump sum payable to you is lower than the one you would have received should you not consider selling. This is how the business goes and this is how those companies earn their share of profit.

Some companies charge high interest or deductions while others have reasonable rates. Regardless, you would find it beneficial to shop around to compare rates, before you decide which service you will use. Also, the company’s legitimacy is a very important consideration. It is your obligation to find out whether a company is legitimate or legal to operate. Proliferating anywhere-on the internet and in the physical world-are individuals and companies that scam the public. It is significant that the company you wish to employ its services is reputable.

Once you have found the best company for you, gather all the necessary documents to expedite your quote. Fill out the necessary application form and choose the best option for you. Depending on the company policy, there are some that respond to their clients within 24 or 48 hours. The first response will be about providing the required documents. After evaluation, you may receive another response from them to inform you how to receive your cash. This part of the process may take some time between 4 and 12 weeks depending on the company processing the selling of your annuity.

Financial contracts such as an annuity are regarded as a valuable possession. Hence, if you sell annuity, you should have weighed in all other options including their benefits and drawbacks. For deeper  information, you may wish to discuss your concerns with an expert.

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Variable Annuity

Variable Annuity

A typical variable annuity is a tax-deferred investment vehicle that is underwritten and sold by an insurance company. The primary selling point insurance agent's stress is that there can be no loss of principal in an annuity contract. For some, this is an attractive feature of a variable annuity. Because a variable annuity is an insurance product, growth inside the annuity is tax-deferred, as is the case in most insurance products. Further, variable annuities allow the customer to choose between a group of well-known mutual funds to fund the principal of the annuity. It all sounds pretty good, at first glance.


Characteristics of Variable Annuity

It is a contract that an annuitant purchases, it offers a variety of investment options, it uses mutual funds, it provides stable income, it requires the annuitant to pay certain fees, it has two phases, and it is tax-deferred.

An annuitant can make a long term investment called an annuitant. The net income generated would be distributed to the annuity leads either once in a year, or twice in a year or even quarterly. Insurance companies offer annuities, which are typically integrated into retirement programs. When the annuitant stops working, it helps the annuitant or his or her recipient receive stable income. There are many types of annuities. One of which is called Annuity Leads which are helpful in matching an annuity investor and an annuity type. You should research a variable annuity, if you think an annuity would be a good investment option for you. But first, here are some things that you should understand about it.

It is a contract that an annuitant purchases
Like other annuity types, a variable annuity is an agreement made by two parties: the insurance company, who is the insurer, and the annuitant, who is the investor. A lump sum or installment payments are the two ways customers can pay for variable annuity contracts.

It gives different investment options
Variable annuities offer a number of options for the investor. These may consist of the following; bonds, stocks, money market vehicles or an assortment of these three.

It uses mutual funds
For investing in bonds, stocks and other money markets in variable annuities, mutual funds are used typically. The investment process works like traditional mutual funds where there is no guaranteed value. Just like traditional mutual funds, the investment values will correspond to the performance of the annuitant's chosen investments. However, switching one fund to another shall not incur any costs or sales charges for the investor, unlike ordinary mutual funds.

You are assured of steady earnings
Variable annuities facilitate the annuitant to benefit from a stable source of income spread over a particular period. This is in line with any other annuity product. The annuitant may obtain the payments from the insurer immediately or at a later date, depending on the contract stipulations. Funds from this annuity can be received by either one lump sum or in incremental monthly or yearly payments.

It requires the annuitant to pay certain fees
There are some fees that have to be paid while purchasing the variable annuities, as well as charges for the mutual fund investments. Typically, these fees include surrender charges, expense risk charges, administrative charges, underlying fund costs and fees for other special features.

There are two stages
There are two phases through which the variable annuities go. Only the purchase payments are made in First phase or the accumulation phase and later distributed to the investments chosen by the annuitant. The phase called payout is only the second phase. Together with the earnings that have been gained from the investment option, the purchase payments are returned to the investor in this case.

You may delay paying your tax in this case
Being tax-deferred is one important characteristic of a variable annuity. It means as long as the income and gains are in variable annuity account, they will not be taxed.
Inevitably, the outcome of variable annuities will ultimately rely upon the decisions and objectives of the annuitant.

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Annuity Definition

So what is an Annuity?

An annuity is a contract between you and an insurance company in which you make a lump sum payment or series of payments and in return obtain regular disbursements beginning either immediately or at some point in the future. The goal of annuities is to provide a steady stream of income during retirement.

Advantages of Annuities

Most annuities are among the most unique types of investments available, and there are many reasons why investors look to them as a key retirement savings vehicle. Some of the key benefits provided by annuities are:

Tax Deferral – Annuities stand alone as the only investment that is inherently accorded tax-deferred status. All money invested into annuities of any kind grows tax-deferred until it is withdrawn. Annuities have no limit on the amount of money that can be placed into them, and there are also no income phase out schedules that apply to contract owners or annuitants. This gives them a substantial advantage over Individual Retirement Accounts (IRAs) and qualified plans for wealthy investors who can shelter millions of dollars from taxation inside these contracts.

Guaranteed Payout – Annuitants that choose any type of life payout option can rest assured that they will receive some sort of payment until they die, even if they completely exhaust the value of the contract beforehand.

Protection from Probate and Creditors – Annuity contracts are generally exempt from creditors in most cases and are unconditionally exempt from probate proceedings nationwide. Exemption from creditors can vary somewhat from one state to another; for more information on this matter, call your state insurance commissioner.

Exemption from FAFSA Asset Status – Parents and students who apply for financial aid do not have to list any annuity contracts that they own as assets on the Free Application Of Student Aid (FAFSA) form. This can obviously make a huge difference in the amount and terms of loans and grants that the student is eligible to receive.

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