Annuities are those financial unicorns that can promise you financial stability for the rest of your life and actually deliver.
The Pros and Cons of Selling Annuity Payments
In the simplest of terms, if you’re an annuity owner, you’ll be investing in an annuity agreement. This is a type of policy that can be used as a trust to secure your family’s financial future.
Regardless of what life throws in your way, having annuity payments on your side can be the perfect solution for unplanned expenses, and even eliminating long-term debt.
Yet, there is no perfect policy. Sometimes, you might benefit from selling annuity payments instead of holding on to your annuity. If you’ve been thinking about the intricacies of selling annuity payments, no worries. You’ve come to the right place.
Keep on reading for our full breakdown of the benefits and drawbacks of having an annuity.
The Pros of Selling Annuity Payments
Let’s start with the advantages of selling your annuity payments. After all, there are a lot of resources telling you all about the benefits of having an annuity without discussing the actual burdens of having one.
First, there are big fees that you’ll have to contend with for a long time. In comparison with mutual funds and CDs, annuities can be a bit pricy to keep. The way annuities work is by going through an agent, who you’ll be paying a solid upfront sales charge.
With directly sold products, which can be bought straight from an insurer, you won’t have to deal with any big upfront fee. However, your annuity policy would also come with a big chunk of annual expenses, around 2% actually.
Unfortunately, the key negative point is the lack of liquidity. With many annuities, it’s your money but you don’t have access to them in any shape or form, except through your monthly payments.
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Thankfully, you can always cash out annuity for quick access to your funds whenever you need them.
The Cons of Selling Annuity Payments
As with the benefits you get to enjoy once you sell your annuity payments, there are a couple of drawbacks that you’ll want to keep in mind.
The key positive aspect of keeping your annuity is the temptation of having an income for life. Basically, it’s income that you can’t outlive. It’s always a great relief for folks to know that they’ll have something concrete to supplement their social security.
Also, there’s always the nice perk of getting tax-free income. Annuities come with a tax-deferred status, which makes them rather popular. You don’t owe the government anything until you withdraw your funds.
Unlocking the Dilemma of Annuities
We know how overwhelming things can get when it comes to making big financial decisions.
Hopefully, our little guide on the pros and cons of selling annuity payments has cleared any vague notions about what you’ll be getting out of your annuity payments, whether you’ve decided on selling them or not.
Just remember that everyone has different financial needs, so all you need to do is some solid research, and you’ll be good to go. Besides, if you’ve liked this article, you can always check out more tips and tricks in our financial section.
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