There are 6 basic annuity settlement options as financial vehicles and about a million different ways you can structure the annuity. The annuity settlement option that is best for you depends on what your long term financial goals are and what financial resources you have available now. If you are wondering how to structure the annuity it is best to meet with a financial planner that can help you asses what your current and future financial needs are. The purpose of annuity settlements are to provide you with an income source over a long period of time, the amount of income you need and the expected life of the annuity will determine the amounts you need now and into the future. Some people who recieve annuities for settlements try to find ways to “sell my annuity,” in exchange for cash now, and depending on your financial situation you may want to buy one of those types of annuities, so keep that in mind.
Annuity Settlement Options
You can sell all or even just small portions of your annuity if you choose. The annuity settlement options are totally determined by you and what you want from the annuity settlement. You can usually exchange the future value of the annuity for a lump sum payment not if you select the right company. These types of annuities can be used for every type of investment or if you have won a settlement and want to structure the annuity to meet your needs from say, car accident compensation if it resulted in your inability to work successfully.
Different Types of Investment Annuity Options
The Life Annuity – No Give Backs
The life annuity settlement option is one that pays the individual a certain amount that is set, over the entire LIFE of the person receiving. This means if you live to 110 years old you will be receiving the same amount monthly over your entire life. Its not without risk though, if you die before the full value of the annuity is realized, that’s it – no more money. It is pretty common in the annuity selling system to be offered this set-up.
Refund Life Annuity – Best Case
The parameters are similar to the life annuity settlement but with these settlement annuities if you die before the full value is realized the remaining amount is still paid to a beneficiary of your choice. This makes it a more appealing annuity because you are guaranteed at least the full value you paid for the annuity.
Life Annuity Certain
With this annuity settlement you are specifying a certain number of years you wish for the annuity to pay you. Usually 10, 15, or 20 years which means you will receive payments for that number of specified years at the minimum. If you pass during that time, your beneficiary will receive the remainder of the payments for the certain number of years you specified.
Joint Life Annuities and Joint Life and Survivor-ship
This is really quite simple, in joint life annuity investments you enter into the annuity with another person, usually a spouse or close kindred. In the event that one of you dies the survivor will continue receiving benefits at a discounted rate that was specified when the annuity is filed. This is tricky because if you and your spouse have certain bills they may not be covered if the annuity is cut in half. If you pay $800 in living expenses, and the annuity goes from the two of you at $2,000 to just one of you at $1,000, that only leaves $200 per month to live on.
It is extremely important you consult a financial planner when it comes to selecting an annuity that will fit your needs and to make sure you understand the annuities pros and cons.
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