PROS of annuities

A.Can you withdraw money out early from an annuity?

It depends greatly on the type of annuity it is. Some have stiff penalties for early withdrawals. Others there are loopholes that financial experts can advise you about which can save you a lot of money and solve your current financial issues.

Not only do you need to review your plan, including any rules, you also need to check with the current Federal Law about the type of annuity you have. Often, if you withdraw from your annuity before you are age 59 1/2, you can be required to pay the IRS an early 10% penalty for early withdrawal.

But that isn't the end of it. You also may be subject to income tax on top of the penalty as well.

What kind of payout options do you usually get from annuities?

Payout options can vary according to the institutions that are running your annuity and what they offer. Typically there are four options for clients:

Income for a guaranteed period. You contract a period of time in which you receive a specific amount of money. Usually, these periods are quite long, so they cover a large part of your life. You get to choose a beneficiary in case you die before the period ends, meaning your beneficiary (a person you want the money to go to like a child or wife / husband) will receive your payouts for the remainder of the guaranteed annuity period.

Lifetime payments. Unlike the guaranteed period, your life factors into the basis of these income payments. The payments can be either variable or be fixed in nature and are determined based on how much you invest and in how long your life expectancy is. The catch is that when you die, you can not designate a beneficiary, and the remainder of your annuity money stays with the company providing payments.

Joint and survivor annuity. This type of annuity depends on the coexistence of two people owning the same annuity. Both parties receive incomes as long as one or both parties are alive. This means that if you have this kind of annuity with your spouse, he or she will still get the payment when you die. If she or he dies before you, you still get the payment as well.

Income for a lifetime a with a guaranteed period. This kind of annuity is a combination of a lifetime annuity and a period certain one. You will still get a guaranteed payout during your entire life and this includes a period specified phase. The good thing is (for others) is that if you die during that period of time, an heir or a beneficiary can still benefit from what's left of that period.

These are the most typical arrangements, but you will find certain different features about each, depending on the company that holds your annuity. Some are less forgiving than others when it comes to contract terms. This is why it is essential to have a trained annuity broker assist you in your transaction.

Regardless of the payment method stipulated in the contract you can sell your annuity whenever you want. This flexibility ensures that you can cover necessary expenses in an emergency or when your life situation changes. Call to get a free quote today.

Are annuities received for personal injury tax-free?

As stated directly from the IRS, referring to Internal Revenue Code 104 (a) (2) and 130 (c), it says and clarifies that any money received due to a personal physical injury through a qualified and approved structured settlement annuity is exempt from taxation.

However, this full amount must be acquired through periodic payments as if received in a lump sum payment with a sell annuity option; the amount is generally subject to taxation upon the distribution. It may sound a little complicated, but this is how personal injury annuities work when you want to sell.


Tip: Before agreeing to sell your annuity for a lump-sum payment, consult with a CPA or qualified tax advisor to see if you will be subject to taxes, and if so, how much. Don't make the mistake of skipping this step as it could mean thousands or even tens of thousands of dollars to you.

Does my annuity keep supplying payments after I die?

This depends on the plan you have. Carefully read your agreement to see which option was chosen and from where you purchased your annuity. Usually, you are buying annuities through insurance or investment companies. They lay out several choices for the annuitant (that's you) and that way you can decide what will happen with your money after you die.

It's vital that you ask all your questions to your insurance provider before you sign on the dotted line. If you wait until afterward, you could find yourself stuck in a situation you don't want to be. Make sure that coverage is active at all times and that in case you need to you can sell your annuity quickly.

Typically you have two alternatives: either the annuity stops paying out after you die or payments continue to go to the beneficiary that outlives you. In cases where the beneficiary does not live longer than annuity owner, then you have the option to change the payout structure. Although this can vary according to the institution, you have chosen to hire. Even if you die your beneficiary will still be able to sell the annuity should they wish to.

How do I make sure the insurance company is going to pay my annuity dues after so much time has passed since I bought it? Is it better to just sell my annuity?

To guarantee your investment, you need to do substantial research about the insurance company you chose to buy your annuities from. Next, perform a detailed analysis of their financial history. If the company goes bankrupt, you will most likely lose your investments, and you will not get your payments once you retire.

This is why sometimes keeping an annuity to be deferred for so long becomes risky. Another reason why selling your annuities could be a sound course of action is for the protection of your financial future.

You eliminate the possible risks of an unstable market, and you can invest the money you get from the sale in more stable ventures.

What happens to a fixed annuity when you die?

As with any of your other assets, you have the legal right of naming a beneficiary to receive your annuity in your unfortunate death. This can only happen, of course, before the annuity has been paid out in full. There are certain types of payout options available that ensure your beneficiary will receive the money in your annuity when you die. Check your paperwork as there are some annuities which pay you and only you and the payments stop at your death.

What is an annuity contract?

An annuity contract is a system converting cash or wealth into a steady stream of recurring revenue or income. You, as the investor, would give money to an insurance company or a broker. The insurance company, or the broker, would then agree to provide the investor with the cash benefit at a future date. Court approval is not needed is most cases.

What type of license is needed to sell annuities to consumers?

According to the Boston research firm Cerulli Associates in 2013, their report stated at least a state life insurance license, and sometimes a Series Six securities license is required to sell annuities in most states.

However, if you are looking to sell your annuity, call or by clicking the button on this page, to see how much your annuity is worth.

How much does it typically cost to go to a financial advisor?

Ensure you see a certified financial advisor so that you will be getting expert advice. What you don't want is getting someone's opinion which is not certified. Most certified financial advisors will charge based on your needs. Typical rates are $ 150- $ 300 per hour.

Of course, the chargeable rates vary based upon location, experience, expertise, and the current competition. For example, you will generally pay more for a certified financial advisor in a major city such as New York City or San Francisco, but less in a rural town.

How do I find the present value of my annuity?

The best and fastest way is to use an online calculator. The Financial Mentor has a free one you can use and you can access it here.

Executive bonus plans (as their high-end needs can't be met with the strict ERISA guidelines).

Are structured settlements and annuities the same thing?

Structured settlements are most often used to settle workers' indemnification cases, personal injury claims, and other types of legal suits. This means there is a regular payment structure, like annuities. Structured settlements work like any additional annuity as a regular payment (usually weekly, bi-monthly, monthly, or annually). The most common is monthly.

Structured settlements gained popularity in the 1970s when many who received sizable judgments blew through their money in less than a year. To protect these people's financial future and to keep them off of government welfare rolls, and also to avoid having such a financial strain on the defendant, the government advised for a solution to be set up in certain cases.

What are the differences?

Annuities are financial products that can be purchased by anyone to secure their future. There's no need to file a claim or go to court to acquire one. Structured settlements are only used in instances of legal claims as a way to resolve the claim and give compensation to the injured party.

Annuities are a steady stream of income for your financial security and peace of mind, structured settlements are the same thing, but you get them as your compensation for an injury or legal claim.

Selling structured settlement is an option you have to get cash now for your future payments, but make sure you go through a vetted company which has your best interests in mind. Call today to get the cash you need.

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