How to Receive a Lump Sum for Annuities
Annuities are contracts that guarantee an income stream for a specified period of time or for the remainder of the owner's life. Annuities are offered to winners of lotteries or large settlements. Annuities can also be purchased through insurance companies. There may be instances where an annuity owner needs to get a lump sum of cash instead of maintaining the income stream; in this case, the owner will need to sell the annuity.
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Instructions
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Call the organization where the annuity is held or being offered as a result of winning a lottery or settlement. If you have not elected to take the income stream yet, this is the perfect time to take a lump sum by requesting this from the organization. Once an annuity has started making regular income payments, also known as annuitization, the process cannot be reversed. Fill out any paperwork involved to take the lump sum.
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Contact a structured settlement company if you have already started receiving annuitization payments. You can find many of these firms through an online search of "structured settlements." These are companies, often law firms, that take structured settlement or annuity payments and buy them. Explain to a representative the type of annuity you have and the current income stream.
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Request a quote from the structured settlement company. Expect the quote to be a fraction of what your annuity's original lump sum value was worth, perhaps as little as one third. For example, if your settlement was originally $100,000, you may only receive $35,000 in a lump sum payment.
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Shop around for the best third party buyout offer. Some firms may try to get your business more aggressively with a higher buyout amount.
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Choose the firm with the highest buyout offer and file the paperwork with them. It may take several weeks to complete the transaction before you get your lump sum payment.
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Tips & Warnings
Because selling an annuity on the secondary market results in losing so much of the lump sum value, it is best to consult with a financial advisor prior to choosing a lump sum or annuity payment. Also keep in mind that there will be income tax consequences involved.
