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Should You Sell Your Annuity?

By Edited May 7, 2014 0 0

Can You Sell Your Annuity?

When Should You Sell Your Annuity?

Is there a ever a good financial reason to sell your annuity? Because annuities offer great security over lengthy periods of time, the owner will receive payments guaranteed by secure companies such as insurance companies, it would seem that there would never be a good reason to part with such a contract.

Sell Your Annuitiy

Basically an annuity is an investment which guarantees payments or money-back in a number of forms. A close look would reveal that these instruments combine both insurance and investment models. One of the essential features of annuities, compared to investments in stocks or bonds,  is the guarantee of a total payback with interest over a set time period. This guarantee usually comes with a trade off in the growth potential of the investment.

Wikipedia defines Annuity As:

“In the United States an annuity contract is created when an insured party, usually an individual, pays a life insurance company a single premium that will later be distributed back to the insured party over time. Annuity contracts traditionally provide a guaranteed distribution of income over time, until the death of the person or persons named in the contract or until a final date, whichever comes first. However, the majority of modern annuity customers use annuities only to accumulate funds free of income and capital gains taxes and to later take lump-sum withdrawals without using the guaranteed-income-for-life feature”. [712]

Almost anyone in the U.S. who has spent their years working for wages while paying payroll taxes owns an annuity. Social Security is an annuity with funds being paid by the Social Security Administration.

The downside of an annuity investment is that the owner agrees not to touch the money for a set period of time. Certain penalties including taxes and additional fees will usually make any attempt to receive early payment when you sell your annuity very costly. Individual annuity features or agreements can change over time, so it is necessary to get good professional help to determine if a portion, 10% per year for instance can be withdrawn without penalty.

Some annuities may offer the advantage of a lump-sum withdrawal to pay for nursing home care. Also there are death penalty provisions that allow beneficiaries to recover the remaining balance of the contract in the event of your death.

However, life sometimes gets in the way of plans and there may be an occasion where a lump sum withdrawal is a worthwhile financial benefit. Potential home foreclosure, college tuition obligations or health problems all might be considered sufficient reason to sell your annuity, but usually should only be considered after all other options are investigated.

Annunities Are Some Of The Most Complecated Investments

Annuities are available in a number of different structures which can be very confusing to the average amateur investor. As mentioned above any annuity decision whether buying or selling should only be done after receiving trusted professional advice. However, you will get much more value from that advice if you understand some basic principles of these agreements. A little time reviewing the available information online and in your local library can reward you with a much better understanding and appreciation of the advice you will receive from the professionals.

Once you have made the decision to sell your annuity whether all or part, you can contact a number of companies that specialize in purchasing all or part of your future payments. These firms will offer you a fixed price for your annuity or partial annuity and pay you a lump sum. From this lump sum they will retain a portion of the value of the payout as their fee. These fees can be substantial and there is also the possibility of tax obligations.

A Little Research Will Bring You Peace Of Mind

The best course of action, in any case, is to spend some time reviewing the available online information and then contact a number of companies for a quote regarding your particular situation. Search the internet for any negative information about any company you decide to work with, and then before you sell your annuity get some trusted professional advice. This type of sale can solve many financial emergencies but should not be done in haste or while you are under emotional stress.



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  1. "Annuity (US financial products)." Annuity (US financial products). 9/October/2011 <Web >

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