Finances are difficult to manage — just ask the 40% of American families who are spending more money than they earn. Perhaps this means that a call for better financial education is in order.
But where to start? One of the biggest financial things that people don’t understand are annuities. Sure, they may have seen them on a late-night television commercial, but does anyone actually know what an annuity is? Luckily, we have the answers for you with this short yet comprehensive guide.
OK…so what’s an annuity?
An annuity is a lump sum payment that is distributed over the course of an allotted amount of time. The amount of time that the payment period spans for varies, but the most common are between 25 years to a person’s death.
Interesting. How do annuities work?
Like any kind of insurance, annuities started with a premium after purchase. Once the premium is paid, it is contributed towards a pool of money that your annuity payouts will ultimately come from.
I think I get it. But how will it benefit me?
Annuities are an excellent investment for anyone but are ideal for individuals with limited amounts of money in their savings. As previously mentioned, annuities are distributed over a period of an allotted amount of years, usually until death. This means that you will be receiving a lump sum of cash until you die. When you have savings alone, it isn’t always guaranteed that you’ll be able to have money coming to you every year.
Okay but what if I wanted to sell my structured settlement or annuity?
Selling a structured settlement is an extremely popular thing to do. Getting cash for annuity payments happens when you sell your structured settlements, resulting in a lump sum. And when you go about selling fixed annuities, it’s profitable and a way to eliminate debt if you’re in a fix and need extra cash.
What does this have to do with my structured settlement?
When you get into car accidents or sustain an injury, structured settlements are often offered in the form of yearly payments, or annuities. But if you want cash for settlement now, in a form of a lump sum, you have to sell your annuity for a lump sum. See, they all work together.
Read more about this topic at this link.