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Why Do People Sell Their Annuity Payments?

After an individual is awarded an annuity payment, one may feel as if the settlement is irreversible and that one is stuck with the decision they made to receive payments throughout their lifetime. Luckily, there are ways to alter the annuity payment. This is done through selling the settlement in order to receive a lump sum of cash. While many individuals find that an annuity makes sense on paper, they later on find that it might not personally work well for their own situation when lived out.

There are multiple reasons a person may wish to sell an annuity, most of which involve receiving a large sum of cash as fast as possible in order to help with certain aspects of life, including:

  • Dealing with financial constraints
  • Need for quick cash for a project or schooling
  • Sickness or injury
  • Desire to make a big purchase

There are also multiple ways in which an individual can sell the annuities, but oftentimes this includes the use of a settlement buyer. Before anything can be sold one must have a legit reason similar to the list mentioned above. While the reasons for selling annuities can vary, most selling must receive prior approval from a judge. Typically an individual must prove that he/she has a serious need for the money contained in the annuity before the sale will be granted.

All About The Money

Ironically, the reasons why people would turn to sell annuity to a secondary buyer is tied to one of the very aspects that makes annuity such an attractive option. Oftentimes when an individual opts for annuity payments over a lump sum the thought process is that a person will be sufficient with receiving cash over a lifetime as opposed to all upfront. Compared to other investment strategies that make it difficult to access one’s money at specific intervals, annuities give individuals the freedom to utilize funds when cash is needed. That said, life can be unpredictable and as such it is a good thing that there is an option to sell in time of need.


The main reason a person would sell an annuity would be a desire to build up some investments. A prime example of this would be a person who is looking to put a down payment on a house. While a bank will grant a loan, you often need a sizable amount to put down before a loan can even be granted. If one’s bank account isn’t large enough to accommodate a down payment, selling an annuity payment may just be the best way to make the investment of homeownership a reality.

Financial Woes

Money can always make life easier. Especially if a person is going through some financial hardships, it can make logical sense to move forward with the selling of an annuity. Some unfortunate scenarios that are generally approved by a judge include: overwhelming student debts, unpaid medical bills, credit card debt or funeral expenses.

Decide Wisely

Although the option to sell annuity is available to those who have these investments, it can still be a difficult decision when it comes to selling. Deciding to sell annuities is technically almost like taking money away from one’s future self to use upfront in the present.  While it can be a depressing thought to know the money will not be there for the future, the sale of an annuity can also bring comfort to an individual who is in need of financial assistance. The best advice is to make a list of pros and cons prior to deciding to sell. Since everyone’s situation is unique, only the individual will know what ultimately will be the best plan of action.