Annuity Payment Methods

If you have entered into a structured settlement plan with your insurer or if you are receiving annuities after a personal injury claim then you can ask for rearrangement of the payment plans to suit your financial position. Following are some of the more common ways of annuity payment under the structured settlement plans.

Direct plans

Under this plan, customers receiving annuities can negotiate payment details with their insurance companies whereby they start receiving payments after their retirement. This is the most common type of annuity payment methods and is commonly used in insurance polices and retirement plans. Tax exemption status is applicable on annuities payable after retirement though state and federal laws might add some overheads and additional taxes depending on the state of your residence. Direct plans that have been agreed to by both parties are not flexible in most cases. If you have entered into this deal and have agreed to the rules and regulations then you will only receive payments after your retirement.

Flexible plans

There are some flexible plans that you can use to ensure payments before your retirement or immediately after you have received favorable injury compensation ruling from a court of law. You can negotiate with the insurance company to start paying you annuities instead of waiting for your retirement or reaching the threshold age limit that has been agreed to in the court settlement. Under this option, people with retirement plans can also ask the insurance agency to start paying the annuities instead of waiting for the holdout period.

Selling your plans

You can also sell your annuity plans to a third party that will start paying you monthly payments immediately after you have inked the agreement. Retirement plans and compensation plans both can be sold to third party insurers if you have followed all the legal requirements. People that are receiving annuities after injury compensation rulings have to follow a different method of negotiation as compared to people that want immediate payment of retirement annuities.

There are two types of payment that you will receive if you are selling your annuity plans. Most people opt for increased or immediate payments of annuities and look for companies that are eager to fulfill their needs. If you want the same thing then you can negotiate improved monthly payments from any insurance company that is offering you the best deals.

The second option is that of receiving a lump sum payment. You will sell your plans to a company that will buy them with all their legal and structural aspect intact. They will pay you a lump sum amount after deducting the relevant fees and charges. You can use this money on any important tasks that are in pending due to lack of finances. You can also simply invest this money. Lump sum payment, however, will eliminate your chances of receiving any monthly payments and you will have to tread carefully in using that amount. You need to settle on only those plans that best suit your financial needs and longer term stability.

James T Monaghan is an investment advisor with 20 years of experience in investments. He is particularly interested in annuity sales and structured settlement deals.

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