What is an annuity?
An annuity, in simplest terms, is a fixed amount of money paid to a person each year.
While simple in concept, in reality there are many different types of annuities, each with its own set of attributes.
The following is a non-exclusive list:
- Single premium investment annuity (SPIA)—An upfront premium is paid, usually to an insurance company, in return for future weekly, biweekly, monthly, biannual, annual, or lump sum future payments, sometimes for life, sometimes for a fixed period of time. Payments are received as a blend of interest and principal. Taxes are usually due and owing on the interest portion of the investment.
- Investment Retirement Account (IRA) annuity—This can have similar characteristics to a SPIA but interest income often accumulates tax free during the term of the annuity. Sale and assignments of these types of annuities can be restricted.
- Pension annuity—These annuities can be found in defined benefit government or company pension plans. Sale and assignments of these types of annuities are restricted.
- Variable annuity—These are often tied to stock market indexes or other measurements of growth. Payments are not fixed and ascertained, but rather can change from period to period.
Genex Capital buys SPIAS and sometimes IRA annuities. We do not buy pension annuities or variable annuities.
Can I Sell My Annuity?
As previously mentioned, if you have a SPIA that does not restrict sale or assignment rights or if you have an IRA annuity that provides for early sale and if these assets are no longer right for you, you may be able to sell some or all of the payments.
Generally speaking, SPIA payment schedules are inflexible. Oftentimes the payor of these payment streams are unwilling or unable to commute or buy back the investment so as to release the funds to you.
The good news is structured settlement funding companies such as Genex Capital make it a business of buying SPIAS and some other annuities. Unlike structured settlements, no court transfer order is required and the transaction can be completed within two to three weeks.
With some limitations, you can generally decide how much or little of the annuity payments you want to sell and keep. At Genex Capital we work with you to find the best solution that fits your financial needs.
If you do decide to sell all or some of your future annuity payments then at the completion of the transaction, you will receive a discounted present value lump sum payment. Remember that in most instances the proceeds of sale are taxable. You should consult a tax advisor for more information in this regard.
What Is The Process To Sell My Annuity Payments?
By deciding that you do indeed intend to sell you investment annuity, you have taken the first and largest step of the process. the rest of the process can look something like this:
1. Consult your annuity policy to determine what payments remain due and owing to you. If you have sold payments in the past you should also note those payments that are no longer available for sale.
2. Calculate how much cash you need.
3. Contact a reputable structured settlement funding company, a company that has been in business for at least 10 years. has a Better Business Bureau registration with no complaints, and does not charge you a transaction fee or legal fee for the service. Genex Capital has been in business for 13 years, is registered with the BBB and has had zero complaints since inception.
4. Working with the funding company, determine what is the best solution for your cash needs. You will be provided with a price quote that sets out the payments you will be selling, the purchase price, and the discount rate involved.
5. Accept the offer and you will then be provided with a structured settlement sales package to sign and have notarized. Genex Capital arranges a notary public in your area to meet with you, discuss the document package and arrange for its signing and notarization all at no charge to you. You can do this in the convenience of your own home.
6. The sale package generally consists of:
- Sale and Assignment Agreement
- Spousal Consent form
- Limited Power of Attorney
- Request for Wiring Instructions (for sale proceeds to be wired into your bank account upon transaction closing)
7. Once the document package has been returned lien searches will be conducted and you will be notified of a planned funding date.
8. Genex Capital commits to funding its clients within 10 business days following receipt of all necessary documents. Genex Capital funds by wire transfer of immediately available funds directly to your bank account. There is no hold period and you can use the funds immediately. The monies you receive are not tax free and you will need to declare the transaction on your next income tax returns. You should consult your tax advisor.
Your SPIA and other annuities are significant assets. You should think carefully about the benefits of keeping these payments verses selling some or all to unlock their present value so as to achieve your goals in life.
Genex Capital is here to help. We have experienced Account Executives standing by to discuss your situation and help you to customize a solution that best suits your needs. Our no-obligation consultation service is free of charge and we are available 7 days a week.
Give us a call and see what your payments are worth.