As with any structured payment stream (other examples include structured settlements, owner financed mortgage notes, and lottery winsnings), holding an annuity has many benefits. On top of the guaranteed payment stream – previously the original reason for purchasing the annuity in the first place – there are tax advantages and the potential for capital appreciation. None of these reasons for purchasing a annuity from an insurance agent are trivial. Do not throw them away needlessly.
But no one knows exactly what tomorrow hold for them, and there may come a time when cashing out your plan for a single lump sum of money is necessary. Sometimes even critical. Common reasons for needing to convert the payment stream from an annuity into immediate cash include:
- Sudden medical expenses .
- Holding off foreclosure of home – unfortunately, this one has become much more common in recent years.
- Family hardship – there can be occasions when YOU are fine, but a family member needs some emergency help. The ability to assist with cash can be critical.
- Time sensitive investment – perhaps a business opportunity has presented itself? It would be a shame to miss out on the possibility because your money is tied up in an annuity.
Each of these reasons (and othersides) might compel a person to liquid their annuity plan. With that infusion of cash, legal problems may be averted, the loss of a home avoided, or strong capital growth might be accomplished. All are worthy ends in themselves; Just be sure (in the case of various hardship examples) that all other options have been explored, and in the case of the hot investment that it really IS a hot investment. Too many stories of people flushing their life savings down the tube because of greed and lack of information. In each case, perform your due diligence!
Once such analyzes have been done, and if selling your annuity remains your best option, then proceed. At that point, you may rest easy knowing that you have not wasted a valuable asset.