How to Buy or Sell Annuity Payments

2007-10-15 12:53:47

( Financial )



What is an Annuity?

An annuity is a long-term financial investment where you pay fixed amounts of installments for a specified number of years. When your annuity plan matures, you will receive annuity payments for a specific number of years as well.

Typically, an annuity contract may also have an insurance feature, so that you have life insurance protection during your investment years. The insurance feature also allows your annuity plan to remain in force even upon your demise, and that your named beneficiary will be entitled to the annuity payments.

Where to Buy Annuity Plans

There are numerous financial investment companies or brokers who sell annuity plans. The broker can discuss your options as to the maturity amount and date, the length of time and the amount of installments you will make for the annuity plan. You also need to provide the account holder's name if you are buying it for another person, as well as the beneficiary of the plan.

You may choose to pay only one lump sum as your invested amount, or pay on installment basis. You need to pay the installments within specified deadlines. If not, you will incur penalties for late payments.

Where to Sell Annuity Plans

On the other hand, you may already have an existing annuity plan which you are still making installments for, or which you have fully paid. However, for reasons of dire financial need, you don't want to wait for the plan to mature. In such cases, you might want to resell your annuity plan either through the same broker you bought it from, or through an independent company that specializes in resale of annuities.

Your broker will give you a price estimate of your annuity plan. If you haven't completed your installments for the annuity plan, you will receive only a fraction of the plan's maturity value. However, if you have finished your installments and are just waiting for the maturity date, you may be able to receive a bigger amount for reselling your annuity plan.

Tips for Buyers and Sellers of Annuities

An annuity is a long-term investment, so if you are considering to buy one, you should weigh all your investment options. There are other investment options with shorter terms and higher yields, but these may be more risky than annuities. Annuities are generally very safe investments, but take a long time to mature. Thus, annuities are ideal if you are thinking of passing them on to your loved ones as inheritance.

When you sell annuity plans, you need to look for reputable brokers to handle the sale and to find the right buyers. Prices may vary between brokers, so you should negotiate well with the parties involved.


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