Terminating your annuity contract before reaching its completion date may hold a number of advantages for you. There are both good reasons and bad reasons for wanting to remove your money from the account. If you do eventually decide to pull your money out there are better and worse ways of doing so; there may be only one really correct way, in fact. Unfortunately, you may incur various fees and charges such as termination and surrender costs if you simply terminate your contract with the annuity company that issued it. Often you can lose a great deal of money doing this, as the charges can be steeper than you would think. Selling your payments on the market as secondary annuities may be the best way to get rid of them.
Very often a family emergency or urgent need for finance is the impetus for someone to sell annuities. Fixed annuities sometimes involve tying up the majority of your money, and sometimes there is simply no choice but to find some way of prematurely extracting the money from the annuities.
You may alternatively have determined that you can get a better return on some other annuity or product, and this may be a reason to change your investment. It can sometimes make sense to sell the account payments so long as the dollar amount you will receive from the fixed annuities will, after meeting tax considerations, create a greater return on your dollars.
Selling your annuity payments on the secondary market has a third purpose when you feel that you could more productively use the annuity’s lump-sum purchase price in a different setting. You could fund another kind of purchasing plan, or maybe simply use the funds to provide for an immediate need for finance. The potential cost of any such transaction is an important consideration, and should not be ignored; make sure that you carefully consider this no matter what the reason for selling your annuity. It is possible that you will face severe consequences, tax-wise, from any such move.
