REQUEST A FREE QUOTE

What is an Annuity?



An annuity is defined as “a fixed sum of money to be paid to someone each year, typically for the rest of his or her life.” This is a very broad definition, and not always accurate. Annuities can be paid out monthly, quarterly, or annually, and may come from a variety of sources. Not all of these annuity payments can be sold, however.

The most common type of annuity and structured settlements include:

  • Lawsuit winnings. These can include wrongful death suits, medical malpractice, injury, negligence, or other similar cases. Whether or not these settlement payments can be sold will depend on the terms of the initial settlement.
  • Casino and Lottery Winnings. Most people who win large amounts from the lottery or a casino are given two choices: take the winnings in one large lump sum (and face the subsequent tax consequences) or accept settlement payments for the rest of their lives.
  • Workman’s Compensation Claims. It should be noted that it is illegal to sell workman’s compensation claims in most states.
  • Pension Plans. Most government and privately owned pension plans contain some stipulations that prevent the sale of the payment, but this again depends on the terms of the original plan.

Just to name a few.

A number of investors use single premium annuities as a form of money management or investment. They are a fairly high yield, low risk investment that accrues interest over a period of time. This type of annuity is the only one that does not require a court date or the services of a company such as ours to transfer from one person to another.

Many people are more than happy with their monthly, quarterly, or annual structured settlement payments. If your payments are meeting your needs, then there may not even be a reason to sell your structured settlement. We want to make sure that the sale of part or all of your structured settlement is in your best interest.

When Shouldn’t I Sell my Annuity?

There are a number of things that you should consider before you sell your annuity or structured settlement payments.

  1. Am I relying on these payments as a primary source of income?
  2. Was my ability to work damaged in some way?
  3. Am I willing to face the potential tax penalties from receiving a lump sum payment?
  4. Do I need this money now?

Let’s take these questions one at a time.

  1. Am I relying on these payments as a primary source of income? People who use their payments as their sole form of income may find themselves in trouble later down the line once the cash from their lump sum payment runs out.
  2. Was my ability to work damaged in some way? Many people become the receipients of structured settlement payments have obtained their settlements because of an injury or prolonged illness. If you cannot work, then selling your annuity may not be in your best interest.
  3. Am I willing to face the potential tax penalties from receiving a lump sum payment? Many people, especially those who receive large lottery or casino winnings, opt to take the settlement payments to avoid having to pay tax penalties on a large lump sum. These same penalties may apply when receiving a large payment from the sale of your settlement.
  4. Do I need this money now? This may be the most important question you could ask yourself before agreeing to sell all or part of your structured settlement. If you don’t need the money, then there is no real reason to sell.

Try to keep these things in mind before you decide to sell all or part of your structured settlement payments.