Sell Your Annuity

Chapter 2 – Your Annuity Can Be a Tax Bomb
Annuities are a good way of accumulating money by deferring the tax payments until sometime in the future. When you start drawing out the money from the annuity is when you will start paying taxes on those payments. If you receive the money in small amounts, the tax amount is smaller and easier to handle. However it goes without saying, if you are requesting the money in a large lump sum, or even a partial amount can be large enough to make you reel from the amount of the tax you are required to pay on the amount. This is a reason it is best not to sell your annuity and take the monthly payments for the term of the contract. It doesn’t lower the amount of taxes, which will be paid; it just makes it easier. When the owner of the annuity expires, this is usually when the big surprise hits. If a loved one passes on and leaves an annuity to an heir, it is the only asset, which does not get passed on to the heir without taxes being charged as it can happen with other assets. So the entire sum of the value of the annuity will be taxed when the heir receives it. There are large sums of money in annuities right now, which is designed to go to the children of the person who originally bought the annuity. When the tax bill comes, it will be a huge shock to all of those involved. It is not unusual to see tax-deferred money, which would have been subject to a fairly low income tax rate to earn taxes of 33% or more when passed on to an heir. The original owner had no intentions of the inheritance becoming a windfall for the IRS rather than the heir they wanted to receive the money. To prevent this you need to make different plans. If you have a fairly large sum of money you want to pass on to your children or heirs, the alternative to an annuity is a special life insurance policy. It is designed for greatest cash growth, which will replicate the level of accumulation of annuity. People wanting to pass on their savings to their children at their death will like the after tax benefits will be much higher as long as the money was accumulated in the life insurance and not the annuity. The money will include the value of the account with an additional amount of life insurance benefit, which also paid to the beneficiary. This money is paid to your heirs income tax free. This is the best way to save money you want you heirs to receive after your death. When people realize the benefits of the life insurance policy over the annuity, they may be looking to make a change. You are not able to change your annuity to a life insurance policy without the penalty of taxes. If you decide to make the change, sooner is better than later. The smaller the amount of money to be transferred the smaller the amount of taxes, which will be paid. Once it is in the life insurance policy the growth will begin much like the growth of an annuity. By closing out the annuity and paying the taxes while the amount is still small when the remainder of the money is placed into the life insurance policy the amount of taxes paid plus will be earned.
There are several different ways you can look at this scenario, which will depend on your individual needs, your current health and additional personal factors. Provisions
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can be written into these policies to provide care prior to the death of the insured party, such as nursing home and convalescent care. The larger amount of the insurance policy will be available to the insured party to cover the cost of such care if needed. The remainder would go to the heirs at the time of the death of the insured party.
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Chapter 3 – Is It In Your Best Interest To Sell?
There are times it can be in your best interest to sell your annuity and sometimes it is not in your best interest to sell your annuity. One thing you will want to do is “Homework”. You will want to make this decision based on information, which will help you make the right choice for your situation. Deciding to sell without information is not a smart move on your part. Sometimes it is best to seek the advice of a professional. The qualified professional will use his expertise of the financial world and give you an unbiased opinion based on your situation. You need to be aware, if you pay out date is 20 years from now no one is going to give you a large dollar amount and wait 20 years for their investment return. If you have not already received your structured settlement, you might want think about the reason you want a lump sum of money. You may want to make sure it is a definite need rather than a frivolous whim. Sometimes huge financial mistakes can be made this way. If your annuity can make more of an investment somewhere else, selling your annuity is not a bad idea. If you have an equity-index annuity, it could be best utilized invested in a different place. However, keep in mind the insurance company is guaranteeing you a minimum return on your...