A Guide to Selling Your Annuity
If you wanted to sell your annuity, how would you do it? An annuity ensures you’re provided with a guaranteed income for a fixed number of years for the rest of your life.
Firstly it is recommended that thorough research is done in regards to who can offer you the best deal and value. Using a broker or an independent financial adviser can help you if you’re unsure if you should sell your annuity and will provide you with the best value, however with this comes charges.
Before You Sell
It is important to note and be aware that you can only sell your annuity if it’s one that is set up in your name. If you were to have a defined contribution pension that was formed by yourself and under your name, you would therefore be able to sell it.
It is also recommended to also seek financial advice and to see a financial adviser further additional guidance to help you acquire the relevant knowledge you need to sell your annuity. Generally financial advisers ask you about your finances, personal circumstances, how you feel taking risks with money and your goals with money. These questions help them to recommend you retirement income products such as, flexi access and drawdown that will ultimately help you.
In legal terms it is said that you must seek advice if your annuity pays over a certain amount per annum.
How Much Will You Receive?
When it comes to how much you will receive from selling your annuity, many aspects are taken in to consideration, such as:
- Your Age
- What type of annuity it is eg joint life, single life
- How much you receive from your current annuity
- Your health and lifestyle
As well as these aspects, a provider may also ask you for a medical report from a doctor or GP. This is requested for so that the provider is aware of your lively hood that will ultimately affect the value of your annuity. From this information being provided, you will be given a price as to how much you will be given.
How Can You Use The Money?
When you sell your annuity, the money received can be taken as a lump sum settlement of cash. If you wanted to use the money further, you could use it to buy a different type of annuity, such as joint or single. You could also buy an adjustable income with the money gained.
Before the provider pays you the structured settlement of cash they will take off the tax you owe. The cash that you take will be added to your other income methods that you may have over the tax year, such as money from work, benefits and savings.
Dependants and Beneficiaries
If your annuity has a beneficiary that continues to pay income to that beneficiary after you die you may not be able to sell it without their consent. If you don’t know if your annuity has a beneficiary, a provider can inform you of this.
With a joint annuity, you will not be able to sell the annuity without a valid agreement from the other person who is part of the annuity.