Lump Sum Annuity

Many funding companies offer a lump sum annuity as an alternative to maintaining an annuity or structured payment plan. Annuities typically come from retirement plans, but others come from investments and insurance companies. When a person retires from a job, they often have a retirement plan in place. The agreement involves distributing the funds in small payments over several years. This allows the recipient to hopefully live off of the funds without working until he dies. As the Bible says, "The ants are a people not strong, yet they prepare their meat in the summer" (Proverbs 30:25). Putting away from the future sounds like the best option. However, in some circumstances, changing that annuity into a lump sum would be the better choice.

Sometimes a lump sum investment opportunity will pop up at just the right moment. This may happen to someone who has recently retired and finds that they are secure even without the pension. In this case, the retiree may want to consider cashing in his pension through a funding company. This doesn't occur without a cost, however. Funding companies do offer less than the overall value of the pension in order for them to make money. Yet, this may be the only time that the retiree can invest. It may be a great real estate investment opportunity or a franchise investment deal. Whatever the case, the investment requires a large sum of money up front. Before making that decision, though, the retiree or annuity recipient really needs to do the math to make sure the return on the new investment will make up for the loss of cashing in.

Before rushing to the nearest funding company for a lump sum annuity with dollar signs in one's eyes, it's smart to sit down and go over the numbers. After obtaining a couple of sample quotes from potential funding companies, average out a number to go by. Look at the investment opportunity and the possible percentage of growth or loss there. Using estimates and averages, the recipient can get a rough idea of overall profits, if any. For recipients who aren't good at math, it may be best to consult a friend or family member with some experience in accounting and finances. It doesn't hurt to approach a financial advisor either. If this is a significantly large sum of money, more than $50,000, it would be wise to contact a professional. This individual will charge a fee, but she will point the recipient in the most profitable direction based on all of the numbers and projections.

The same advice applies to retirees who want to cash in in order to make a lump sum investment in the stock market. Stock market fluctuations aren't a perfect science. Therefore, a retiree will need to consult a financial advisor who specializes in investing. Depending on the retiree's goals, the money can be divided up into different stocks to minimize risk. Sometimes a lump sum can go further in the stock market than small payments long-term. This all depends on the market and what companies the funds are invested in. As with a real estate or franchise deal, the retiree must consider if the funds will make enough back to balance out any losses to the funding company by cashing in.

In some cases, cashing out a lump sum annuity has nothing to do with an investment opportunity. A retiree could be facing a serious financial situation that requires a heap of money immediately. It could be an injury, illness, a death in the family, personal bankruptcy, a law suit, or any number of circumstances. In these cases, profits and losses seem insignificant. Even still, the recipient must not act in desperation. Since losses can be significant, the recipient should check into other sources of funds. After all, a retirement plan is something that the retiree has safely stored away for years through hard work and dedication. For most retirees, once this money is gone so is retirement, and sometimes going back to work isn't even physically possible. In these cases of dire circumstances, it's just as important to talk with a financial advisor about other options.

There are many funding companies that offer to purchase annuities so that a recipient can obtain a lump sum investment. When selecting the right company, it's important to consider reputation and experience. The funding company doesn't necessarily have to be local unless the consumer prefers working face-to-face. Whether local or non-local, the funding company should have a long-standing reputation and experience in working with annuities. These same companies may also purchase structured settlements. Both require being able to work professionally with the state laws and with many retirement or insurance companies. By looking on the Internet, it's easy to find customer reviews, complaints, and other red flags that will signal a bad company. When searching the name of the funding company, poor reviews and important outsider information will often come up. Be sure to read it. Browse websites for potential companies and read all of the information that is provided. Then call or email for a quote. This estimate should be available in a matter of days. Compare offers for the best one, but be sure that the company is reputable.

No matter the circumstances, seeking a lump sum annuity is a delicate process that requires no quick decisions. Professional advice is key. Following the advice of a funding company may not be wise, considering the fact that they don't have the retiree's best interests in mind. A third party advisor will give sound advice that makes sense of an often confusing process. Overall, let the numbers speak for themselves. Retirement annuities may be better off as is. Introducing the possibilities of risk and loss to such precious funds may not be worth the stress. Opportunities for a lump sum investment will come and go, but pensions only happen once.

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