An annuity can be an integral part of your financial planning. This type of investment can help meet your retirement goals by providing a steady income source. An annuity is a contract between you and an insurance company. You make a lump sump payment or a series of payments over a specific amount of time, and the insurance company agrees to make payments to you at a future date. Obtaining an annuity is one way to prepare for future expenses, and an annuity combined with a pension and other retirement savings can provide a comfortable lifestyle in your later years.
However, financial situations can change rapidly over the years. And depending on your current financial situation, you may need to sell your annuity and take a cash payment. Selling your annuity may sound silly because you lose a percentage of your money. But if you have an immediate need for cash, it pays to obtain structured settlement quotes from companies that buy annuities.
The money you lose by selling an annuity may be less than expected, in which selling may be a good deal. Then again, you might be indifferent about selling your annuity, but will consider this possibility if the situation is right. Here are five reasons to consider selling your annuity and receiving a lump sum.
Medical Care
Medical care is costly. Even if you have health insurance, a major illness or a high deductible can create thousands of dollars in medical bills. With no way to pay these bills, you risk lawsuits and possibly bankruptcy. Selling your annuity can provide income to settle these balances and help you afford long-term medical care after an illness or accident.
Buying a New House
Purchasing a new home is a major expense. There is the down payment and closing costs, which can both range between 3% and 5% of the home price. If you do not have this cash in a liquid savings account, cashing in an annuity can provide needed cash to realize your dream.
Avoid Bankruptcy
Perhaps you’re on the verge of bankruptcy due to high credit card debt. If you cannot afford your minimum payments and creditors call your home daily, consider the benefits of selling an annuity. Use cash from your settlement to pay off creditors and regain peace of mind. You not only satisfy creditors, but also increase your personal credit score.
Caring for an Elderly Parent
If you’re caring for an aging parent, their medication, home health aids and other care can take a chunk of your income. And if your parent needs around the clock care, you may not have the resources to afford this expense. Selling an annuity lets you give your parent(s) the care he or she needs and deserves.
Home Repair
Maybe your home needs major repairs after a storm and you have a high homeowner’s insurance deductible. If you don’t have cash in savings and you want to avoid a high-interest loan, sell your annuity and acquire cash to repair your home. Home repairs might include replacing a leaky roof, repairing mold damage or fixing problems with your pipes.
Understandably, cashing in an annuity isn’t the right choice for everyone. Before you make a decision, carefully weigh the pros and cons. Explore other ways to obtain cash and cash in your annuity as a last resort.