There are various benefits to selling your annuity for a lump sum. However, no two people with annuity payments they need to sale for a lump-sum cash payout have the same financial needs. Each has their own life. Some have children. Others don’t. Each person, as is each payment stream, is different in many ways. These differences need to be considered before making a choice. For instance, if a payment stream is set too far in the future and no payments will be received for years, this can impact the discount rate. In a case like this, ask yourself: Is it really worth it?
For some a lump-sum payment can help secure a more prosperous future, but for most people it’s not in their best interest. Consult friends, family, even an independent consultant before making the final decision to sell your payments.
It’s a big decision that you will have to live with for years to come.
A lump sum of cash in exchange for the transfer of payments may be a good choice for those holding onto a structured settlement annuity that need cash now (but are secure in their future needs), but as with many other financial decisions, pros and cons need weighed, and what may seem like a solid decision at first, may prove otherwise.
Most importantly you will need to find a dependable company to buy your payments rights. You’ll need to make sure they’ll pay in a timely manner and that they are honest and dependable. By selling your structured settlement for a lump sum versus holding onto it, you will be trading stability for cash in hand. If said cash in hand is of a great enough benefit, or if the need is immediate, selling can be the right choice. If the choice is based on wanting to have more free cash or disposable income, it is one you will regret.
Many others- those in true need- use the lump sum they receive for vehicles, mortgage payments, bills, even college tuition for their children. Before approval of the transfer of payments can be approved in a court of law, a judge will have to deem the transaction in your best interest. Because the decision impacts them as well, this includes any dependents you may have.
The process can take several months. So finding the most reliable possible buyer is important.
Finally The best quote isn’t’ always the best price. Make sure the quote you are given reflects the final amount you will receive.