Category: Structured settlement brokers

Four Reasons Why People Sell Their Annuities

    Finance Tips

Structured settlement cash out

In the world of financial planning and retirement, the biggest question isn’t just “What are annuities?” The main question is, “Why are people buying annuities, and then looking for structured settlement cash outs?” The simple answer here is that annuities aren’t always the greatest investment, and many people only find out about the downfalls of their annuity after buying it. For starters…

  1. First of all, inflation is naturally going to occur no matter how much you invest or how strong the economy is; settlement annuity payments rarely — if ever — take inflation into account when calculating the monthly payments you’ll receive. In other words, although you’ll get the same amount of money each year during retirement, you won’t be able to do as much with it.

  2. It’s possible to buy an annuity that gives increased payments over time — these are called percentage increasing annuities, and although they seem to solve the problem of inflation, the remaining problem is that you’ll end up getting much smaller payments at the outset (and if you happen to die soon after you start receiving payments, you’re out of luck).

  3. In fact, as grotesque as it might sound, the issue of how soon you (and/or possibly your partner) die after you start receiving settlement annuity payments can be a major problem, too. Level annuities promise to give you payments each month until you die, but if you happen to pass away just a year or two after you start receiving your money, then the rest of your investment will go to the annuity/pension company. Fixed annuities give you a bit more control over your money by promising a specified amount each month until your money runs out, but if you happen to out-live your money, then you’re left to your own devices as far as finances go.

  4. Taxes are another problem: although your lump sum investment won’t be taxed while it sits in your account, once you begin receiving payments, those payments will be taxed just like a regular paycheck would be. Unlike a regular paycheck, the most common annuities aren’t adjusted for inflation (and consequently for tax increases), meaning that it’s incredibly difficult to plan for how much money will be taken out of your regular payments.

So what do you think? Are these downfalls still pretty minor, compared to the benefits of annuities? Or are they enough to convince you that annuities are the worst? More on this topic.

Annuities For Dummies What You Need to Know

    Finance Tips

Structured settlement cash

Are you looking for a different way to gain money when you’re older, besides the usual 401k plan? Buying annuities can be a better alternative or an addition to other long-term monetary plans you have implemented. This article will provide some key information regarding annuities for dummies.

After buying annuities, people generally demonstrate a certain unique loyalty and commitment to their purchases. In fact, around 93% report they still own their first annuity. People generally buy an annuity to help them manage their incomes in retirement, because it provides them with a steady stream of income for a set amount of years, or until it runs out.

First off, what are annuities, exactly? They are a complex investment and/or insurance product that is sold by an insurance company.

Many people will try to deter you from buying annuities, on the grounds that insurance agents collect a large commission, or that you may not qualify for an annuity. Those with an annual household income below $100,000 may not qualify for purchasing this product (eight out of 10 people do not qualify), yet it can be a great investment decision if you do qualify.

Before you purchasing an annuity, you should figure out why you are buying it and what you want it to do for you. Ask yourself these three questions:

What type of annuity am I buying?

An immediate annuity is when you pay an annuity lump sum payment in order to start receiving monthly fixed or variable incomes. You should purchase this type if you are looking for guaranteed income and want an income that will last for the rest of your life.

Deferred annuities require a deposit to an insurance company, which will then cause the money to grow, tax deferred, until you reach a certain age (most likely around age 60) or a certain date is set. Fixed annuities provide you with a specific rate of return that the insurance company guarantees you.

A variable annuity, on the other hand, is for those who want a tax deferral. This type is not recommended for those trying to meet short-term goals because there can be substantial taxes and insurance charges that apply if you withdraw your money early.

Why are you buying the annuity? Some people don’t understand why they are buying annuities, so make sure you do some research first. If you have already explored other investment or retirement options, then this may be the best choice for you.

One benefit of this investment plan is that you are guaranteed a minimum level of income during your retirement every month, as opposed to receiving a lump sum of money you won’t know what to do with.

What happens if I die? You must name a beneficiary for your annuity if you decide to purchase one. Most will also offer death benefits to family members. Understand that those inheriting the annuity after you have passed must pay an income tax no matter what is left of the annuity.

Talk to a trusted insurance company or lawyer about whether or not this retirement investment option is for you.