Structured Settlement Annuity

Structured Settlements vs. Annuity: What’s the Difference?

Structured Settlements vs. Annuity: What’s the Difference?

At first glance, you may not see a difference between the basic functionality of a structured settlement and an annuity.  After all, both offer the person a monthly fixed payment over the course of a set period of time.  What’s more, both offer the opportunity to be sold to an outside company in exchange for a lump sum of cash.

While these traits are indeed ones that are shared by a structured settlement and an annuity, these similarities serve as a launching point that demonstrates the disparity that does exist between the two.

Court Involvement

The main difference between a structured settlement and an annuity is how the former is received by a person. Typically, a structured settlement is something that is handed down by a court order, whereas an annuity is something based in an investment.  

Because of the legal nature of a structured settlement, the nature of working with a structured settlement company to sell the settlement in exchange for a lump sum of cash comes with a lot more strings attached.


For example, a person and a structured settlement company will more than likely have to deal with what is known as a structured settlement protection act.

A piece of legislature that dictates that any transaction between a person and a structured settlement company must be approved by a state court.  This legislature is on the books of every state except the following:

  • Alabama.
  • Hawaii.
  • New hampshire.
  • North dakota.
  • Vermont.
  • Wyoming.

The other large difference between a structured settlement lump sum and an annuity lump sum is that the use of the structured settlement lump sum is significantly more rigid.  

Simply stated, a structured settlement cannot be sold to a structured settlement company if the resultant money is going to be spent on purchases the court may deem to be frivolous. 

Because of the nature of origin that defines most structured settlements – that is, a court case – The court can dictate that the money can only be used in that matter in the case of dire financial emergency, such as medical bills stemming from an unexpected emergency, mounting credit card bills, or sudden funeral costs. 

These restrictions are not in place if the person adheres to receiving the structured settlement in its originally intended, fixed payment format; Just in the event that the money is received through a transaction with a structured settlement company.

For Your Protection

The primary reason for these rules being in place has to do with protecting the person receiving the structured settlement.  Keep in mind that a structured settlement is not part of an investment strategy.  rather, it’s part of money that was not necessarily planned for. 

As such, the courts have these stipulations in place as an invisible financial advisor of sorts; Guiding and directing people blessed with this sudden influx of money into making wise financial choices instead of blowing it all in one shot.

And when you look at it in that manner, it becomes rather clear that the decision to restrict the ways in which a structured settlement company can purchase a person’s settlement is a good one.

Sell Your Annuities: What You Need To Know

If you have a transferable annuity, you probably know the basics.  You know how it is defined.  You know how it can translate into a fixed monthly cash payment for you in the future, particularly if you are close to your retirement age. 

You also know that it affords you a tremendous deal of flexibility, as you can work with a secondary company to have them buy annuity in exchange for a lump sum.  And you probably know that you can use that lump sum in a host of different ways, such as:

  • Pay off medical bills stemming from unexpected emergencies.
  • Pay off student loans.
  • Pay off credit card debt.
  • Put a down payment on a house.
  • Produce capital for a business investment.

These are all good things to know.  after all, knowledge is power.  That said, if you are looking to have a secondary company buy annuity, there are a few other things that you should know beyond what you already do.

Getting Ready to Sell

Assuming that you already have determined that your annuity is transferable, you should make sure that your annuity is not attached to a structured settlement.  If it is, you should be prepared to jump through a few extra court-ordered hoops before the transaction can be finalized.  

All but six states have what is known as a structured settlement protection act on their records; This piece of legislation dictates that all transactions between you and the company looking to buy annuity must be approved by a state court.

The next thing you should do is sit down and evaluate just how much your annuity is worth.  In order to do this, it is in your best interest to eliminate any guesswork that you may have on your end and get together with a qualified professional such as a financial advisor.  

Doing so will enable you to get familiar with all of the ins and outs of your annuity down to the slightest detail, which in turn will allow you get the most “bang for your buck” when you negotiate with a company looking to buy annuity from you.

Speaking of which, you should take a considerable amount of time 

researching the burgeoning secondary buyer market to determine what 

service fits your needs perfectly.  

Find a few companies that have sterling reputations amongst the peers in

 their field and make a careful evaluation of the pros and cons of each


Almost There

Finally, once you have determined what company you want to work with, make sure that you have all of your paperwork in order.  Like any financial transaction, selling your annuity comes with a host of important documents that are essential to moving the process along. 

One misplaced paper or missing form can derail the transaction process for days if not weeks; as such, keeping things in meticulous order is a must.

Overall, the process of selling off your annuity is one that is painstakingly methodical in nature. 

However, there is a very good reason for this – Namely, your money is involved.  As such, the process practically demands that you treat it with the utmost of care and precision.  Doing so will make everything more streamlined and efficient, which in turn will make you much happier.

How to Sell Your Annuity Payments for Cash Now?


If you have an annuity, you are most likely familiar with the fact that you can sell annuity to a buyer from a secondary market.  this is one of the nicer aspects of investing in an annuity option, because it gives you the kind of freedom to access your money from an annuity that you may not have with other investments.

You also are most likely familiar with why someone would want to access their money before the annuity payments kick in.  These reasons include:

  • Buying a home.
  • Getting out of debt incurred by credit cards or student loans.
  • Unpaid medical bills caused by an unforeseen illness or incident.

While an annuity is designed to help take care of you tomorrow, the fact that it can also help you out today if you need it makes it an appealing investment option.  That may be one of the reasons you invested in an annuity in the first place.

However, what you may not be familiar with is the payment options that are available to you once you decide to sell annuity to a secondary buyer.

A Trio of Sell Annuity Choices

There are three different ways that you can choose to sell annuity to a secondary buyer.  Each of these choices carries their own advantages and disadvantages that are flexible based upon your personal situation. 

In other words, what may be the perfect sell annuity option for your friend or

 family member may be an imperfect one for you.


The first sell annuity option 

That you have available to you is a partial sell option.  This option enables you the chance to only sell a portion of your annuity to a secondary buyer, thus enabling you to retain some of your annuity for its original intended use of providing you with a fixed recurring payment down the road.

The second sell annuity option 

That you have at your disposal is the entirety sell option.  This option will obviously clear out your annuity investment all at once, which would in turn mean that any fixed recurring payments that you would otherwise receive down the road would also cease.  

However, you would have all of the money from that annuity in your possession, where you would be free to use it for all of your pressing needs.

The final sell annuity option 

That you can utilize is the lump sum option.  This option allows you to set a periodic selling timeline with a buyer, where you are able to sell off large lump sums of your annuity as opposed to a one-time selling option.  

This will allow you to sell off your annuity over time, but it will also enable you to enjoy a steady flow of annuity income during the lengthened sell annuity process.

Take Your Time

Regardless of what option you go with, you should take the time to analyze your annuity and your situation in order to confirm what sell annuity option best for you.  

There are plenty of tools that you can use to help you make an informed decision, so try to use them to their fullest capacity.  After all, it is your money.  Can you do no less?

Cash for Annuity: Getting the Most Bang for your Buck

An annuity can be a rather attractive option for a person looking for a flexible long-term investment strategy.  After all, it seems practically custom-built to help an individual deal with virtually any aspect of life. 

Obviously, the notion that an annuity is designed for a person to turn current funds into future structured payments can be an ideal skeleton to build a retirement plan upon. 

However, the fact that an individual can receive cash for annuity by way of selling the plan to a secondary buyer also grants them the type of flexibility that may be needed in order to handle some of life’s curve balls, among other items.  

Indeed, receiving cash for annuity can allow a person to have money to handle things such as:

  • Paying off credit card debt or student loans.
  • Paying medical bills stemming from unexpected emergencies.
  • Procuring a down payment for a home.

However, in any cash for annuity situation, a person needs to be aware that by doing so, they will not receive the full annuity amount.  As such, it is important that the individual looking to receive cash for annuity do plenty of research to make sure they are receiving as much of their money as possible.

Number Crunching

The rule of thumb in a cash for annuity situation is that a secondary buyer would typically offer anywhere between 60% and 85% of your annuity.  

This is something that a person may want to keep in mind before going down this road, as the notion of effectively losing some of their annuity over the long haul may be something that may not be all that appealing. 

That being said, if a person is at peace knowing that some of anywhere between 15% and 40% of their annuity may be lost in this type of procedure, a good measure of research and study is required in order to maintain the most annuity possible.

More than Just Money

However, maintaining the most of a person’s annuity is not necessarily the only metric that should drive a person’s decision making process. 

Remember, a secondary buyer acts like most other business in the goods and services sector, in the sense that factors such as customer service, price for services rendered, and overall reputation amongst other clientele should play a considerable factor in making the final decision. 

If a service is offering 85% of a person’s annuity but has a reputation for shoddy, subpar service, another service that has a sterling reputation for being an industry leader may be worth researching further, even if they only offer 80% cash for annuity.

Ultimately, the process of receiving cash for annuity is a personal process; one that is built upon not only receiving money, but doing so in a manner that is as smooth and efficient as possible. 

By doing research on what companies can offer the most cash for annuity with the fewest amounts of headaches, a person will be doing more than just setting the wheels in motion to receive a large amount of money.  They will also be setting themselves up for receiving peace of mind, even before they see a dollar.

Pros and Cons to Selling a Structured Settlement Annuity

Life can be unpredictable and part of the instability of life means that one never knows when they may need some extra cash in order to make living a little easier.  When going through the process of setting up a structured settlement annuity, one never knows what the future may hold. 

At the time it may make sense to receive payment over a long period of time, but should the circumstance of life change one may wish to sell the structured settlement annuity in order to have some extra cash on hand immediately.

Many individuals looking to sell a structured settlement annuity should know all of the facts prior to pulling the trigger and selling for some quick cash.  It is important to weigh all options and know the pros and cons to the process because the process is not only cumbersome but it is not as simple as it may seem.  In short, there are three main ways to sell a structured settlement annuity, including:

Partially: If one sells a portion of annuity or structured settlement, one will
 continue receiving some periodic income from the remainder of the 
investment without losing the tax benefits. 
The structured settlement will continue to carry those tax benefits, and
 extend them to one’s beneficiaries in case one dies before collecting all

Entirely: Choosing to sell the entirety of one’s structured settlement for the full term of the contract means one will empty the investment at once, ending any chance of periodic income payments in the future, but one will still have a lump-sum payment to invest.

Lump-sum: Selling lump sums over time gives one the money now in large increments, but it still guarantees one will have a steady flow of income from a structured settlement for the term of the contract, while carrying the same tax benefits as before.

Now that there is clarity on the different ways to sell, it should be made clear what it means to sell structured settlement payments and what the pros and cons of such a decision are.


Upon the original agreement of a structured settlement, the money is guaranteed and is often spread out over several years or even decades.   The benefits of selling such a settlement cannot be overstated. 

The biggest benefit is that you can immediately receive your cash now instead of receiving continuous small payments over time. 

Many people are unemployed or underemployed; families are moved from bad living situation to bad living situation; And therefore some immediate relief can definitely come in handy.  

Selling a structured settlement is definitely a helpful and quick fix to any financial troubles that one may be encountering in life.


If the recipient decides they want to sell and they are of age, of sound mind and body, and they haven’t contractually obliged these future payments to another, then one has the right to sell off all or a portion of these payments.

When someone sells structured settlement payments one is paid a flat rate now for the future money at the agreed upon rate and schedule.  

As a result, one will not receive as much money from his/her structured settlement when it is cashed in, as they would have if they had waited and received the payments over time.

Companies that buy structured settlements profit from buying settlements in order to stay in business.  For the seller, this means that one will be offered less for annuity than it is worth in cash payout.  

How much less depends on factors that are always changing (ie – Market conditions and interests rates). 

The fact is the discounted purchase amount is the price that one must pay in order to tap into the money immediately.  That is why it is especially important for one to only resort to selling a structured settlement annuity when there are no other options left.

How to Sell Annuities?

One of the things that make investing into an annuity is its flexible nature when it comes to accessing your money.  Unlike some other investments, an annuity payment that is not locked in as a non-transferable annuity payment gives you access to your cash in times where money beyond your typical monthly intake is needed. 

These situations can include:

  • Needing a down payment for a home.
  • Medical bills that mount in the wake of an unexpected emergency.
  • Needing money for an investment opportunity, like a new business.
  • Needing to pay off a debt, such as a student loan or credit cards.

The way you can access your money in an annuity situation is to sell annuity to a secondary company.  This is an increasingly popular option for people that have annuities to utilize, as there are an abundance of companies that exist specializing in buying annuities.

However, as with anything tied to investment, there are a few steps that you should take before you sell annuity to an annuity buyer.

Due Diligence

First and foremost, you need to get a bead on exactly how much your annuity is, or as close to exactly as you can possibly get.  Obviously, if you are looking to sell annuity, you will want to receive the maximum amount of payment from the annuity buyer.  

As such, it is imperative that you get the most up to date information regarding your annuity as possible.  Doing anything else can potentially shortchange you.

Secondly, you need to make sure that you do plenty of research on the prospective buyers that you could be selling your annuity to.  Because you have options here, you should be as thorough as possible in doing a little company investigation.  

For example,

You can go check out various review websites to get a pulse on how other people perceive their business.  You can also see if they have any testimonies listed on their website.  

If they do, you can take your research one step further by contacting the people responsible for the testimonies and verifying their words of praise. And don’t forget to ask your friends and family to see if they have any recommendations or opinions on any perspective buyer.

Finally, make sure that you have all of your paperwork lined up and ready to go before you proceed with your transaction.  This may seem like a minor step in comparison to the other two steps, but its importance lies in the fact that it will make everything run significantly smoother. 

One misplaced yet crucial piece of paper may cause a host of unpleasant delays, not to mention a whole lot of stress.

Steps  To Take To Sell Annuity Based On The Type Of Annuity

Steps  To Take To Sell Annuity Based On The Type Of Annuity

There are a few other steps that you may have to take to sell annuity based on the type of annuity that you have.  

For example, if you have an annuity from a structured settlement, you may have to get state court approval to sell it to a buyer depending on where you live. 

However, these extra hoops that you have to jump through aren’t necessarily definitive of the sell annuity process.  For the most part, as long as you do your due diligence, the process of selling your annuity to a buyer is relatively easy to execute.