SELL ANNUITY

Selling your annuity can be relatively painless if you are informed and knowledgeable about your financial options. MyNoteMarket has collected information about the annuity sale process and resources to help you research your options. A traditional annuity sale/transfer has a different process than selling an annuity linked to a structured settlement.

Use the Education section below to quickly understand:

• How to Sell an Annuity
• How Annuities are Priced
• Due Diligence - What questions to ask.
• Terminology

Once you have gone through the Education section, use the additional Resources to research potential buyers, review current news and blogs, and get links to tax and legal sites.

Education

How To Sell an Annuity

1) First you should determine your current and future cash needs and financial condition. Remember, you can sell all or just a portion of your future cash payments. It is recommended that you consult a financial advisor or lawyer.

2) Contact the insurance company or financial advisor who issued/sold your annuity to determine if you can cash out(surrender) the annuity and what penalties are involved. Depending on the type of annuity and contract, it may be possible to surrender the policy and pay a surrender charge directly to the insurance company. This option may give you more money than selling the annuity. Some immediate annuities do not have an option to cash out early.

If the surrender charges are too high or the annuity does not have a surrender option, you should obtain all the contract/policy details and confirm the annuity can be assigned to a new buyer. You will need this information to give to the potential buyer.

*Tip: Even if an insurance company says the annuity is not assignable or transferable, you may still be able to sell your payments.

3) Determine what amount you would like to sell. You will receive more money for payments that will be received sooner than payments in the distant future. Please see "How Annuities are Priced" to understand cash flow pricing and discounting.

4) Search for a buyer of annuities. It is very important to feel comfortable with potential a buyer. Please see "Buyer Due Diligence" for tips on selecting a buyer.

There are a number of ways to find a potential buyer:

• talk to your financial advisor or lawyer,
• use this site to identify potential buyers,
• search the Internet,
• talk to friends, family, or acquaintances who have sold an annuity.

5) Get multiples quotes for your annuity. Potential buyers will generally give you a free analysis and no obligation quote for your annuity. They should explain all potential options and provide an amount that you will receive. While the highest quote may be attractive, you should consider all the factors together. These factors include: reputation, experience, your comfort level, etc.

*Tip: Ask the buyer up front about all costs and who is responsible for paying them.
*Tip: Beware of potential buyers who ask for a fee up front. There should be no fee for a quote or analysis.

6) Once you have selected a buyer, you will have to sign a contract with the buyer. This contract should outline the terms and conditions of the annuity payment and agreement.

*Tip: It is strongly advised that you have your lawyer review this contract before you sign it.

7) Now the information gathering process will begin. The potential buyer will request specific information about your annuity. It is recommended that you have as much information collected before you begin this process. This process can last between 2 to 14 days.

*Tip: Request to see the buyer's privacy policy.

Information requests can include:

• Annuity policy/contract - from an insurance company or payment provider
• Copy or confirmation of your most recent annuity payment
• Your personal information including driver's license
• Your lawyer's information, if needed.

8) Once the buyer has all the required information, they will begin an underwriting process. This process usually lasts between 2 to 8 weeks, depending on the buyer, the insurance company and complexity of your annuity. They will contact the insurance company to work through the details and ensure compliance with the new contract.

*Tip: Ask the buyer up front about the process and time to completion. Be cautious of very short process times.

9) When the underwriting is complete, the buyer will generally issue payment within 5 to 14 days.,

Congratulations! You sold your annuity.

*Please note: these are general guidelines, all situations are unique and vary by state and company.

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How Annuities are Priced

Annuities are priced by discounting the future payments by a discount rate. This discount rate can vary widely from 7% to 17% or more depending on the buyer. The lower the discount rate, the more you should receive for your annuities. Also, the further out a payment is, the more it will be discounted. Meaning you will receive less cash now as the time to receive future payments increases.

Check out these links for more information:

• Time Value of Money- Wikipedia
• Structure Settlement/Annuity Pricing - Wikipedia

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Due Diligence

There are numerous potential buyers for your annuity, it is hard to choose the right one. But with a little due diligence(research), you can select several that are reputable and right for you. One important point you should be aware is whether you are dealing with a principal or broker. If you a dealing with a principal, you may get better pricing due to the absence of the broker fee. Most principals use brokers to bring them business but there is a definite cost associated with this added layer of service. But brokers can be valuable in finding multiple buyers and could potentially get better pricing even after factoring in their fee. The buyer should pay the broker fee, not you.

Here is a guide to help you choose the right buyer:

1. How long have they been in business?
2. Is their contact and business information verifiable?
3. Are they bonded or insured?
4. What is their underwriting criteria?
5. How is their Better Business Bureau rating?
6. Do they handle your type of annuity?
7. How many annuity purchases do they do a year?
8. Are they familiar with your insurance company and state practices?
9. How will they price your annuity?
10. What discount rate did they use in the quote?
11. Can they provide a time table for the process?
12. Do they use multiple financing sources for your quote?
13. Are they a principal or a broker?
14. Are they associated or member of a larger corporation?
15. Do they have a privacy policy?
16. Are they members of trade and professional organizations?
17. Are they professional in all communications and business presence?

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Terminology

Here is some basic terminology for annuities:

Annuity - A financial product usually sold by insurance companies or other financial institutions to provide financial planning and/or savings. In a structured settlement, an annuity is used to make payments over a specific period of time. Annuities are regulated by several professional and governmental organizations. For more info see: Annuity - Wikipedia

Annuitant - The person or persons who receive income from an annuity contract. Usually the Contract Owner.

Annuitization - Conversion of a deferred annuity contract to an income payment stream.

Annuity Certain - An annuity contract that pays periodic income payments for a stated period of time, regardless of whether the annuitant lives or dies.

Annuity Contract - An agreement from an insurance company that states the terms and conditions of the annuity. Also referred to as the Policy.

Annuity Death Benefit - A guarantee that if an annuity contract owner dies before annuitization begins, the beneficiary will receive the value of the annuity.

Annuity Issuer - An insurance company that issues the annuity.

Accumulation Value - The dollar value, at any Valuation Date, of all amounts accumulated under the Policy.

Annuity Starting Date - When annuity payments are scheduled to begin.

Anniversary - The one year periods after the annuity is issued.

Beneficiary - A person who receives continued annuity contract payments if the annuitant / owner dies while payments are still due.

Contract(Policy) Owner - The person(s) or entity that has all rights to the contract. Usually the person(s) or entity that purchases the annuity.

Free Withdrawal – The amount that is available each year for withdrawal without a surrender charge being imposed.

Guaranteed Interest - The minimum guaranteed interest rate that is earned on the annuity.

Insured -The individual whose life is covered by an insurance policy.

Loan - An amount cash given to the owner an insurance company which is secured by the policy's cash surrender value.

Surrender - Termination of the annuity / policy by its owner in exchange for the policy's cash surrender value.

Surrender Charge(s) - Charges that are deducted when the owner surrenders an annuity/ policy.

Surrender Cash Value: The cash value after any loans or surrender charges have been deducted.

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