Annuity Payment Lump Sums

Written by Jacey Harmon
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Annuities are used to pay off lottery jackpots, provide charitable donations, settle lawsuits, and fund retirement. In any case, an annuity converts a sum of money into a payment stream. This payment stream is guaranteed by the company that is providing the annuity, typically an insurance company. Over time, the payments may not be meeting the needs of the annuitant or they may not need the payments at all. Annuitants can request a lump sum of money for the rest of the annuity payments from a third party.

Reasons Why People Request Lump Sums

In some instances, people request a lump sum in order to pay for college for a loved one or themselves. A retired grandparent may be receiving annuity payments that are not needed to live. The grandparent may see that a grandchild is getting ready to go to college and need help paying for the education. Since the money is not needed, the grandparent can receive a lump sum of money from a third party in exchange for all future annuity payments.

Oftentimes a good investment may present itself that requires a substantial lump sum of money. A person may see that the potential value of the investment far outweighs the accumulated total of annuity payments. By exchanging the annuity payments for a lump sum, a savvy investor can take advantage of the new investment.

Exchanging annuity payments for lump sums is usually a rather simple process. Unless the annuity is part of a structured settlement, receiving money for future payments can take just a matter of weeks. Structured settlements may require a court order in some jurisdictions in order to sell future payments. When the courts are involved, the speed of the process is held captive to the speed of the court system.


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