Exit Strategies for Annuities

When you are trying to sell your stocks, bonds, or mutual funds you will find it is easy, but selling your annuities are another story. If you have a tax-deferred annuity, you will have to pay surrender charges to cash out. At one time, if you were already receiving payments from your annuity, you were stuck with it until it paid out. That is no longer the case. An emerging secondary market for annuities is giving investors the opportunity to sell their annuities for more money than the insurer would give you.

If you are looking to sell your annuity, you might find these transactions appealing. An American Council of Life Insurer survey questioned 460 annuity holders. 27% of them said they were afraid they would not be able to sell their annuities, if they needed money for something else.

J.G. Wentworth, Peachtree Settlement Fund and a handful of others are incorporating into their usual business of buying structured settlements, the buying annuities. With this new market, not every policy can be turned into cash. There are annuities, which are in tax-qualified retirement accounts are not sellable because the Internal Revenue Service will not allow the ownership of these annuities to be transferred. Another ineligible for sale annuity is the immediate annuities. The payout of this annuity is not guaranteed.

The price you get for the sale of your annuity is based on the entire dollar amount, which is to be distributed, the amount of time the payments will be made, and the current level of interest rates. The other factors to be considered are the financial strength rating of the insurance company along with the terms and conditions of the contract, such as a death benefit.

Another unusual way to sell your annuity would be to transfer the current annuity to another annuity, which will make you larger payments and the amount of time you will receive those payments will be shorter. You may have to pay larger fees for the new annuity, but you may fair better with the end results. You can also use your annuity as collateral on a loan.

If your reason for selling your annuity is to receive a large sum of money to get you through a financial situation, you may want to try and get a loan before you try to sell your annuity, or you may have an annuity you are unable to sell because of the type of annuity you have.