A huge emergency had just happened in your household and you are in immediate need of huge amount of cash. The only thing you have that could resolve your liquidity problems is your annuity plan. No doubt that the obvious solution to your problem is to sell your annuities, right? In this situation, you do not really have much of a choice.
Selling them would help you a great deal even if you do not get the amount your annuity is really worth. However, if you are just tired of paying out your annuity plan and you just want to get rid of it, or you are just impatient to get your hands on your cash, or you are anticipating a large expenditure in the near future, it pays to think it over a hundred times. It is a fact that many people do not really know or fully understand our policies and contracts about insurances and annuities.
This is why there are a lot of fake companies out there that take advantage of people ignorant of their rights and of the worth of their annuity plans. Companies that pay much lesser than what these people deserve and take much longer to issue payment if they ever do.
So to guard yourself against such predators, you should arm yourself at least with the basics. You should at least understand the basics of your annuity plan, the things you have to consider and the right questions you should ask before selling your annuity.
First, consider your type of plan. There are various kinds of annuities and your selling decisions should be based on them. Each type of annuity works in differently from each other. There are two main types of annuity and they are fixed annuity and variable annuity. Fixed annuities are those that pay a fixed rate of return while variable annuities are those that allow the plan holders to invest in stocks and bonds.
Hence, the rate of return in variable annuities differs depending on the investments progress and the economic state of the market. However, these two sometimes branch out to other different types according to payments and other terms.
Other forms or the sub-forms of annuity come in as deferred annuity and immediate annuity. Deferred annuity gives you a guaranty that your investment would increase in value and you can sell it when you need income from it. On the other hand, immediate annuity enables you to liquidate your investment within a short time after purchasing the plan in a lump sum payment. The best thing about this plan is having the choice of life income with a refund payout. This ensures that the full value of your contract would be paid by passing the payments on to your beneficiary.
Now, the next thing you should consider is whether selling your annuity plan would truly benefit you or holding on to it a while longer would provide more benefits later. First basis on selling your annuity are the two main types of annuitiesfixed and variable.
If your annuity is a fixed annuity, holding on to it until before you retire is the best option. This annuity provides a stable income source for the rest of your life after you retire. After all, that is the very reason why you availed of annuity in the first placesecurity.
However, the rate of return in this plan is not assured to keep up with the inflation rate. So if you really want to sell it, the best time is before you retire.
Now if your annuity is a variable annuity, you also have to consider the timing in selling it. Remember that this plan does not guarantee a good rate of return, so selling it must be timed with the market performance.
Sometimes, selling it an earlier time would prove beneficial than selling it a later when the market is down and you really need the money. This would put you in a situation when you dont have much of a choice but sell it at a lesser value.