Lump sum versus annuity

Published on September 23rd, 2015 | by Day Trader

3 Unfortunate Reasons to Sell Your Lottery Annuity

Sell structured settlement payments

Winning the lottery is guaranteed to be an exciting and crazy time in your life. While everyone is not so lucky, for those that are one of the biggest decisions you’ll immediately be faced with is whether you want to receive your lottery payments in a lump sum versus annuity style. Many people select the lottery annuity as a way to secure their future and maybe even protect themselves from themselves. Annuities payments are still subject to taxes and early withdrawals can invoke hefty fines, up to 7% in some cases, on top of the annual 3% maintenance fee most include. That being said, there’s no telling what kind of decisions you’ll make with a couple million dollars in your pocket.

If you did win a lottery and elected for the lottery annuity that doesn’t mean you are stuck waiting for your money indefinitely. In fact, there are many companies that you can sell annuity payments to if your situation changes and you decide you need the money now. Here are three unfortunate incidents that no one can plan for which might make you re-think your annuity decision and lead you to seek an immediate cash buyout.

    1.) Medical Emergency: Not pleasant to think about, but they can happen to anyone at any given time. Whether it be you or a family member, medical emergencies can rack up large bills quickly. Rather than let the debt pile up and wind up paying even more in interest with some type of payment plan, sell your lottery annuity and take a portion of the money to pay off these bills before they can do more damage. You’ve already been hurt physically, there’s no reason to compound that by damaging your financial standing as well.

    2.) Car Trouble: One of the biggest annual expenses is in vehicle purchase, maintenance, and repair. Everything else in your life might be going great and then the wheels fall off. Literally. Or you hit a deer, your engine seizes, whatever the case may be cashing out your annuity can be the perfect solution if you’re in need of major car repair or replacement. Again your other option is taking out a loan and setting up a payment plan, which is fine, but you’re going to end up spending more money in the long run. On top of not having to pay the interest, buying a car in cash can be a great way to get an even better deal than you thought possible.

    3.) Lawsuit: Hopefully you’ll never find yourself on the wrong end of a lawsuit, but if you do it might be time to sell that lottery annuity. Over 80% of cases settle outside of court, which can save both parties time and money. Depending on the circumstances you might be better of agreeing to a settlement and offering to pay a smaller amount than a judge would order you. There is the risk the plaintiff will lose in court so many times they will take a settlement offer.

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