If you have cable, it’s likely that you’ve seen the commercials, clad with opera-singing civilians, waxing poetic about how they need cash now for their annuities. While those commercials are indeed silly and entertaining, they don’t do well to explain what an annuity is, and exactly when, where, and why you would want one.
Luckily, this guide exists to show you exactly what annuities are, and everything you need to know about them.
So what is an annuity?
An annuity is a financial sum that is sold by insurance companies that effectively enables you to put money away. While the money is away, it increases in value and will ultimately turn into a larger s um of money. There is no limit as to how much you can put in your annuity, and if you have it long enough, it can accumulate immensely. /when you sell your annuity, you are receiving a previous investment back that’s accumulated a great deal.
What about lottery annuities?
When you win the lottery, you are given two options: either take an annuity or a lump sum. Annuities are helpful because they save your winnings from being squandered up front, and allow them to accumulate further, recovering from the loss of money that transpires through taxation. When you sell your lottery annuity, your lottery payments will be much higher and more lucrative.
Many save their annuities for retirement, so they have money put aside for their future when they are no longer working. In fact, social security can be seen as an annuity settlement of sorts.
How are annuities different from getting cash for structured settlements?
When you get in an accident or have legal dealings and the court rules in your favor, you are often paid money over time. A structured settlement provides a stream of cash owed to you over a specific period of time. Getting cash for structured settlements is a lot like annuities, but one involves court proceedings and the other does not. Research more like this.