Receiving your money in an annuity or structured settlement is a relief when it comes to knowing you have income for the long term. Guaranteed income for life is an attractive deal when you first sign the contract for your payment schedule. However, life’s changing circumstances may mean that your need for cash changes, and you may be among those with an annuity settlement in need of a lump sum.
You can sell your annuity for a lump sum.
When you choose between the lump sum and settlement arrangements, you may consider the amount you may pay in lump sum taxes. Tax-free settlement payments are stable for a longer period of time. Once you choose, you cannot change your contract, but you can sell those structured settlement payments after the fact in order to get cash you need sooner than your payment schedule allows.
You can use your cash now.
The most obvious benefit of receiving lump sum cash is in its immediate use. If you received your settlement as a result of a personal injury or wrongful death case, you may have medical bills or even funeral costs to attend to. Receiving a lump sum settlement is one way to cover those expenses quickly. However, if you chose the annuity settlement and later have expenses that exceed what you can afford, you can reverse your decision by selling your payment stream in exchange for cash. Returning the money to your hands enables you to use it in whatever way you need it most.
You have investment control.
A structured settlement annuity is purchased and controlled by an insurance company, not by the plaintiff. This enables the payments to remain tax-free, but at the cost of the plaintiff not having investment control over their funds. For some, the low-risk investments the insurance company is making for their settlement funds are not sufficient. Selling the structured settlement payments to receive a lump sum puts the cash in your control. While you will have to pay interest on investment earnings from a lump sum, you have the power to determine what investments to make and can increase your returns.
It will not lose value due to inflation.
One of the dangers of investing in an annuity or receiving a structured settlement is the fluctuating economy. Delayed payments will lose value due to inflation, meaning the dollar amount of your future income will be worth less when you receive it than it is today. If your payment stream is a fixed amount, you can choose to sell your future payments to receive a lump sum you can use without having to worry about inflation or other economic fluctuations.
If you are considering selling your annuity or structured settlement payments, Novation Settlement Solutions can give you a free quote and help you decide how much cash you need. To get started, call 1-888-610-1849 or use our online form today.
*Novation is not a financial advisor and/or consultant and strongly recommends that you speak to a lawyer and/or accountant before making any significant financial decisions.