How to Cash Out an Annuity: 3 Simple Steps to Getting Around the Conundrum

We all live in financially (and otherwise as well) uncertain times when bad things are almost waiting to greet us unexpectedly. It is in times like these when we may need to resort to things that we would not normally consider if things were smooth sailing on the financial front. So while going through hard financial phase, you may consider how to cash out an annuity for secure income for life.

However, pragmatism needs to take center stage at such times, which also means doing the usually unthinkable: cashing out your fixed annuity beforehand to meet a financial contingency. Before you go ahead and cash out bonds, it is extremely important to understand the pros and cons of your decision. In this case, it will be the extent of losses you will be undertaking on your investment.

The basics about how to cash out an annuity early must be made known to holders of annuity and cardinal mistakes must be shunned like plague. For instance, one needs to carefully examine quotes from well-known annuity settlement companies and make earnest inquiries about the “taxes and fees” you will need to pay out while cashing out.

Read more on Companies that Buy Structured Settlement.

You would also do well to ask good questions like “can you cash out a fixed annuity” about the extent of time to be taken by the cash out process as it could range from a few weeks (or days) to many months, based on the individual circumstance.

How to Cash Out an Annuity: 3 Steps

#1. Do your research

Research thoroughly the companies which specialize in offering annuity services like cash out pension or cash out life insurance or may be cash out mutual fund. Look around carefully to locate the most reputable company and bear in mind that you will be selecting a firm which will be the repository of thousands of dollars of your hard-earned money.

There are many online and offline sources which mention that some companies tend to tilt the figures in their favor and against those who need it the most;

Hence, make sure you gather as much information on cashing in an annuity early and about the company before zeroing on someone.

#2. Get a quote

The next step is to obtain a quote for the lump sum amount which you will get after cashing out the annuity. Be fair and neutral while assessing the quote.

If it is much less than what you have put in, then it would be a good idea to explore other sources.

As an instance, if you have put in $100,000 but will get only $30,000-$40,000 after cashing out an annuity, then it’s clearly not a fair deal and a red flag must be raised because the loss is simply not worthy of the payout.

You will also need to pay taxes which are cashing out annuity tax consequences and other charges while cashing out your annuity, so you may want to ensure about those fees as well while working on the quote with the broker.

#3. Proceed and cash out the annuity

Now is the time to let your broker know that you are ready to proceed with cashing out the annuity on the basis of your research and the most feasible quote. Be careful while filling out the paperwork which will then seek information pertaining to the account in which your funds will be deposited to.

If your case is rather complicated, this process of  how to cash out an annuity may be completed over a period of many months. However, if it is a straight forward case, then all it will take is a few days.