What are annuity payments?
In order to understand the benefits of selling annuity payments, it is first essential to discuss what annuity payments actually are. Basically, annuity payment is defined as time value of money wherein a formula of evenly-spaced flow of cash annuity is used. These may include payments for mortgage or monthly recipes from your retirement account.
The payment for your annuity should always be the same amount during each period and it should occur at even intervals. Payments should also be made exactly at the start or at the end of each period. It should include all inflow as well as outflow and represent the payment during the compounding period.
How to receive annuity payments
When you decide to purchase annuity, an important factor you need to consider is the method on how you want to be paid. You have the option to select payouts for a set period or it can be continued throughout your lifetime. There are also options wherein the beneficiary can choose to receive the annuity payment upon your death.
There are several choices namely the straight life option, the joint or survivor option, and the refund annuity. The straight life annuity enables you to derive income throughout your lifetime even after the money you had put into annuity has already been used up. However, if you die even before the account has been used up, nobody can collect the payouts. The straight life annuity is perfect for someone who don’t have any dependents or for a person who needs to maximize his income.
Options in selling annuity payments
Many people want to sell their annuity payments because they want to get their money now instead of waiting for years. So it is a welcome development that there are many annuity buyers who legally buy your annuity payments so you can take advantage of lump sum payments today. However, you should choose the annuity buyer you will do business with carefully because you certainly don’t want to get involved with a company that is not really trustworthy. In addition, some buyers offer greater amount compared to others.
You should also take note that most annuity buyers also offer you flexible deferred payment schemes wherein you can choose a comfortable size of payments that is perfect for you. Most of the time, people just want to become free of the restrictions that has been imposed upon them by the settlement. Another option is to sell just a small portion of your annuity payments so that you will have the comfort of knowing you will still have annuity payments in the future.
As you can see, the advantages of selling annuity payments are undeniable. You will get the money you need in case of an emergency or if you need a significant amount of cash as capitalization for your business. Meanwhile, some people decide to sell their annuities to fund their children’s education or even to help a relative who needs money.
But whatever the case may be, it is a good thing that there are annuity buyers in the market so you will be able to sell annuity payments when you want to. And knowing that you have something to fall back on during extreme circumstances is enough comfort for a lot of people.