What Is an Annuity?
An annuity is a type of investment that converts large, lump-sum balances into regular payments. This offers a stable income, often over many years.
Annuities are technically an insurance product, but the return on investment most plans offer makes them a popular option for investors. In general, most of our customers got their annuity in one of three different ways.Investing For Retirement
Mutual fund companies, large banks, and investment firms offer annuities to people who want to make sure they have money to spend when they retire. Similar to a 401k or other retirement plan, you deposit a portion of your pay over set number of years. That investment then generates interest until you’re ready to retire and start receiving payments.
If you’re close to retirement age already, another option is to purchase an immediate annuity. After investing a single lump sum, they’ll get regular payments for the rest of their life.Structured Settlements
Structured settlements are a type of annuity awarded by the court as compensation for a personal injury claim. The liable company puts money into an annuity policy and then the insurance company sends regular payments. If you have a structured settlement annuity, check out our page on selling your structured settlement.Inheriting an Annuity
Sometimes our customers receive an annuity as part of their inheritance. In some cases, annuity payments stop when the person purchasing them passes away, but they have the option of modifying the policy, known as a rider, so that they can designate an heir to continue receiving their payments.
Like most investment options, you can customize an annuity to match almost any financial plan, but every annuity is one of two broad types: Immediate and Deferred.Immediate Annuity
An immediate annuity is one that starts making payments almost right away. Rarely purchased as investments due to the limited amount of interest they earn, you can only purchase an immediate annuity with a single lump sum. This makes them an excellent choice if you’re close to retirement, since you get the money right away. Structured settlements are a form of immediate annuity, since they start making payments to the plaintiff almost immediately.
Unfortunately, once you start receiving payments, insurance companies usually won’t let you withdraw your lump sum. If you want access to your money sooner than the policy allows, you usually have to sell your future payments to an annuity buyer like J.G. Wentworth.Deferred Annuity
If you purchased you annuity decades before you expected to retire, you have a deferred annuity. After you finish making payments into the policy, the insurance company invests it, growing the account by generating interest. When you reach retirement age, the policy sends you regular payments, supplementing social security and your other retirement investments.
Like a 401k or IRA, most deferred annuities offer a buyout clause, allowing you to cancel the plan early, receiving a lump sum instead. Cancelling a deferred annuity means paying an early withdrawal penalty, but it’s an option you don’t have if you purchased an immediate annuity.
When you bought your annuity, you were thinking about your future. From a deferred annuity investment to investing a lump sum in an immediate annuity, you worked with your financial advisor to make a payment plan that made sense at the time. If you received an annuity as part of your inheritance, your loved ones set up the plan the best way they knew how because they wanted to pass their legacy onto you.
Now you’re looking at what you want to do, and those regular, predictable payments don’t give you the cash you need when you want it. Maybe you want to put a down payment on your dream home, start your own business, or pay your child’s college tuition. You need a way to get your annuity in a lump sum; you need options. That’s where J.G. Wentworth can help.
At J.G. Wentworth, we’ve helped thousands of customers sell some or all of their future annuity payments in exchange for a large lump sum. Our experienced representatives will look at your policy and give you options for how you can get the money you need sooner. Check out our page on how to get cash for your annuity , or speak to a representative to learn how we can help you.
With the proper paperwork, we can get you a free, no-obligation quote in just a few minutes.
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“I had an annuity; I had monthly payments coming in every month. It wasn’t gonna be enough. A commercial came on; I heard the word annuity, and I’m like hey, that’s something that I’m trying to do right now. It’s like a sign.”Read More