Most of us think that any sudden windfall of money is at best a miracle, and at worst a fantasy. Few think that it will actually happen to us — yet it can indeed happen. Yes, you can win the lottery; and if you win the lottery, there’s a good chance that you’ll end up choosing to receive the money through annuity payments, perhaps not initially knowing exactly what this means. If you want to consider a more down to earth scenario, think about structured settlements. Each year, many people win structured settlements, and often these result in awards of a large amount of money. If you have a an annuity of any kind, nobody would be surprised if you wanted to sell your annuity at some point. This is because typically, annuities are not all that they seem. Many who might initially agree to an annuity end up regretting it in the long term. There are many reasons you might want to sell your annuity in return for a lump sum — and many benefits to getting a lump sum instead of an annuity. Let’s look into how this works, and why a lump sum might be right for you.
Annuities: How They Work
Many people are so shocked by the fact that they’re the recipients of lottery winnings or structured settlements at all that they don’t know quite what to do. This is understandable — nobody expects that this would happen to them. But when it does, you will often be given a choice between an annuity or a lump sum — and often times, you’ll be pushed towards an annuity, even if this isn’t the right choice for you. The workings of lump sums are obvious; you receive a large amount of money at once, rather than payments of money over a period of time. An annuity turns your lottery winnings into lottery payments, and works in a similar way in regards to structured settlements. Usually, they are available in varied lengths and payout periods. However, the most common type of annuity is paid out over the course of 25 years, or in payments lasting until death. When thinking about an annuity, you should also consider the taxes involved in “winning” a large amount of money. A sum of money will likely be taken immediately, and your tax bracket will change. So what are the benefits of receiving a lump sum rather than an annuity? If you sell your annuity, can you receive these benefits?
Should You Sell Your Annuity? The Benefits
If you’ve already agreed to an annuity, you wouldn’t be alone in wanting to get cash for an annuity. Some simply grow tired of the way annuities work, finding them to be hassles and frustrations. However, there are more serious, individualized reasons why people would want to sell their annuities for lump sums. In the case of structured settlements, many receive their settlements in cases involving injury. As such, it’s natural that they would want to use their settlements to pay for their medical bills. A survey conducted by the Rutter Group, for example, revealed that 25 to 30% of accident victims use the money from their judgments within two months of recovery. In fact, 90% of victims exhaust that money within two years. This shouldn’t be shocking — the fact is that medical bills are expensive, and are one of the main reasons why people go into debt. It’s said that 35% of the American population reported having trouble paying off their medical debts. Of course, this is far from the only reason why people go into debt. Student loan debt is a major factor as well in terms of the nation’s overall debt, and with the cost of college rising, it’s almost impossible for many people to avoid. If you want to take care of your debt efficiently and quickly, the best option for you could be to simply sell your annuity for a lump sum.