Annuities are one of the most prevalent ways society uses to pay back, or pay for damages done to someone. It’s a way to provide the damaged party with restitution over a long period of time and thus doesn’t require the paying party to have to come up with a large sum of money right away. As of 2013 there were approximately 34.8 million individual deferred annuity contracts alone totaling a value over $2.58 trillion. Some people prefer to receive their money immediately, though, for a variety of reasons. Medical bills, home mortgages, or even that they believe they can yield a better return by investing the money themselves are just a couple examples. For whatever reason, selling an annuity settlement has become very common today. Here are three things you should do when deciding for yourself.
1.) Make a List: There’s nothing wrong with writing up an old school, pros and cons list. Before you decide if selling an annuity settlement is right for you, it’s good to lay out what both options will entail. You’re making a decision that will affect the rest of your life, make sure it’s the right one.
2.) Research: Contrary to what some people believe, there are some shady characters out there that would love to give you a small amount of cash for your structured settlement payments. Hiring a lawyer or financial adviser of some kind to assist you in finding the right buyer is a great way to avoid getting burned. They can help make sure you find a reputable company to do business with.
3.) Budget: If you decide on selling an annuity settlement the first thing you’ll want to do is plan out how you’ll be spending and investing the money. Selling your annuity means you’ll quickly come into a substantial amount of cash. Don’t let the dollar signs trick you into thinking it will last forever. According to The Rutter Group, statistics show that 25%-30% of accident victims spend all the money they get from settlements within two months of recovery. Within five years that number increases to 90%. Chances are they could be one of the 64 million Americans that reported having trouble paying bills or had accumulated medical debt in 2014. Paying off bills and debt is a great way to spend your annuity cash, but don’t blow it all. Unless you absolutely can’t, you’ll want to make sure you invest a good portion for your future.