Myths about a Structured Annuity

There are many myths out there about selling a structured annuity that misguides people when going into the process. Some of the myths include receiving money right away, no hidden fees and that all annuities are tax-free.

Myth 1
The myth that you can get your money right away is false. Selling a structured annuity is a legal process that can take months to process before you actually receive money. There is a lot of paperwork that must be completed and each state is different in terms of rules and regulations. Your lawyer has to file a signed disclosure agreement and a court date must be set. Setting a court date can take some time as well.

Myth 2
There are no hidden fees. It is important to do detailed research on the company that you decide to use to sell your structured annuity. Make sure to find exactly what you will be charged over the course of the process. Sometimes companies will quote you a high amount that you will receive, but then add on high hidden fees that you were unaware of, which then lowers your amount to take home. Ask for a disclosure form to see what the net and gross amounts are.

Myth 3
There is some misinformation out there that all annuities are tax-free, which is not entirely true. Structured settlement annuity payments are received due to a personal injury case, which are tax-free. However, when it comes to investment annuities for retirement those aren’t tax-free. They are tax-deferred, meaning that a person pays the taxes when they start to receive payments.

These are just a few common myths, which is why it is so important to do your own research. Talking to multiple sources in this area will allow you to have a more well-rounded view of how to go about selling an annuity. The more informed you are you will be better able to make the right decisions and feel more comfortable. Never rely on one source of information and be sure to shop around when choosing a firm to handle your annuity.