Determining the value of an annuity can be tough as most people don’t think about this question until they need to raise cash and decide to look into selling the annuity. What an annuity is worth depends on many factors, much like getting a loan on a car, credit, payment schedule and duration all go into determining how much you can receive for the future payments. We will dive into these three aspects so that you can answer the question, what is my annuity worth before you pick up the phone to call.
What is My Annuity Worth – Is it Affected by my Credit?
The good news is that the value of your annuity is not based upon your personal credit. Matter of fact, what we look at is the credit worthiness of the annuity company that is making the payments. Much like people, the annuity companies get rated from poor to great by several different rating companies such as Moodys or Standard & Poors. These firms give a rating based upon the likeliness that the annuity company will make the payments as described in your annuity policy along with the hundreds of thousands of other policies outstanding. The higher the rating the more your annuity is worth and of course the opposite exists. There are a handful of annuity policies we can not buy because the annuity company is so poorly rated. As long as you have an annuity from one of the main players in the industry such as:
then there would not be much, if any, reduction in the annuity worth for the quality of the annuity company. There are many others that are highly rated, so if your company is not listed above you can research your annuity company by following this link.
How Do My Payments Affect What My Annuity is Worth?
The annuity payments have a large amount to do with the annuity worth. How far the payments are spread out makes a big difference in what the payments are worth. For example, we had a gentlemen call us a few years ago that had one payment of $500,000 due in 2050. That’s right, 2050. This payment is obviously not worth nearly what a payment of $500,000 due in 2015 would be worth. The farther out the annuity payment is due the less it is worth today. If you look at monthly payments, the payment due next month is worth the most and each next payment becomes progressively worth less as they go into the future. Keep in mind that when the annuity was purchased it was purchased for a much smaller amount then what is paid out over time. Give us a call at 1-877-919-8003 and one of our friendly and knowledgeable specialists will be happy to help answer your questions of what is my annuity worth.
Now that we have a better understanding of the annuity worth, the following tips will help you decide what to sell of your annuity payments. First, you should know that you do not have to sell all of your annuity. You can cut up the annuity to fit your goals and desires. What I always try to guide people to is what is the least amount of money you need today? By answering this question, we can look at buying the smallest amount of the annuity as possible and leaving payments for the future. Also, you should answer how much of the annuity do you need to live off of and pay your bills. Once you know how much you need and how much you can afford to sell, then it becomes much easier to build a plan to get you what you want today from your annuity.
What do I do Now That I Have an Answer to What is My Annuity Worth?
Contact one of our specialists who will take the time to go over the annuity worth, understand what you need and what you can afford in order to provide you a plan that fits your life and goals. Our friendly and knowledgeable specialists are available at 877-919-8003 or complete the form to the right and we will contact you. Our goal here at Mainstreet Funding is to ensure your complete and absolute satisfaction with your transaction.