Sell Annuity Payments For Cash

Are you thinking about selling annuity payments?

Annuities guarantee a steady income over a long period of time. However, if you are currently holding an annuity, you could reap big benefits if you sell annuity payments for a lump sum. You may have:

• Purchased an annuity to provide future income.
• Received a structured settlement from an insurance claim or lawsuit.
• Won the lottery or a casino jackpot.

Sell annuity payments to Woodbridge Structured Funding, LLC ! Woodbridge can provide the liquid assets to start building tomorrow’s dreams today.

Don’t let your annuity turn into a life sentence!

In the past, owners of annuities had to hold on to them for life—even if they could earn a greater return on their money through other investments. Since 1988, when the SEC first allowed the sale of annuities, investors have been able to sell all or part of their future annuity payments and take control of their wealth, whether it be to start up a business, provide for unforeseen financial hardships, purchase the home of their dreams, or place their money into investments that better serve their lifestyle.

The lawyers, insurance companies, and casinos don’t know what’s best for your money—you do! Let Woodbridge Structured Funding, LLC’s talented and creative staff of financial professionals help you sell your annuity for the best possible return today. Our firm pioneered the sale of annuities, and we will work closely with you to help you meet your individual needs. The principals of Woodbridge Structured Funding, LLC have purchased close to one billion dollars in payments since 1993, and no one works harder for their clients.

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What does an annuity cost?

As with many financial products, there are costs when you buy an annuity. Commissions are often 1% or more of the total amount you pay. That's $1,000 on a $100,000 annuity.

If you are buying from a financial institution that already has your investments, you may be able to get a better deal. However, you will not see the actual charges, because they?re factored into the income you get.

How are annuities priced?

The financial institution looks at a number of things, including:

• How much you want to spend. This is called your premium. The bigger your premium, the higher your income will be each month.
• How many payments they will have to make over the years. With a term-certain annuity, they know the exact number. With a life annuity, they have to estimate based on your gender, marital status, and state of health. Then they use insurance tables to project how long they will likely have to pay you.
• The costs of paying you the annuity over the years. This includes sales commissions and administrative costs. Also, every time you add an extra option, the costs of your annuity increase, and your monthly annuity payment decreases.
• What they may earn by investing your premium over the years. This is how the financial firm will fund your payments.

Once they understand all these things, they can determine the size of your monthly payment.

How do options affect what my annuity pays?

This chart is based on an initial investment of $100,000 in a single straight life annuity. It shows how your income may drop as you add extra options.

Type of annuity	What it's designed to do	Sample monthly annuity income
Straight life	Provides you with income for life	$650
Life plus five-year guarantee	Provides you with income for life. Guarantees 60 payments to your estate in case you die within the first five years of your contract	$640
Life plus 10-year guarantee	Provides you with income for life. Guarantees 120 payments to your estate in case you die within the first 10 years of your contract	$620
Life plus joint-and-last-survivor	Provides income for life for you and your spouse. Payments stop when both of you have died	$500
Indexed life annuity	Provides income for life. Payments increase with inflation to maintain your buying power	$400 to start (goes up when prices rise)

Calculating The Present And Future Value Of Annuities

At some point in your life you may have had to make a series of fixed payments over a period of time - such as rent or car payments - or have received a series of payments over a period of time, such as bond coupons. These are called annuities. If you understand the time value of money and have an understanding of future and present value you're ready to learn about annuities and how their present and future values are calculated. (To read more on this subject, see Understanding The Time Value Of Money and Continuously Compound Interest.)

What Are Annuities?
Annuities are essentially series of fixed payments required from you or paid to you at a specified frequency over the course of a fixed period of time. The most common payment frequencies are yearly (once a year), semi-annually (twice a year), quarterly (four times a year) and monthly (once a month). There are two basic types of annuities: ordinary annuities and annuities due.

• Ordinary Annuity: Payments are required at the end of each period. For example, straight bonds usually pay coupon payments at the end of every six months until the bond's maturity date.
  
• Annuity Due: Payments are required at the beginning of each period. Rent is an example of annuity due. You are usually required to pay rent when you first move in at the beginning of the month, and then on the first of each month thereafter.

Since the present and future value calculations for ordinary annuities and annuities due are slightly different, we will first discuss the present and future value calculation for ordinary annuities.

Watch: What is An Annuity

Calculating the Future Value of an Ordinary Annuity
If you know how much you can invest per period for a certain time period, the future value of an ordinary annuity formula is useful for finding out how much you would have in the future by investing at your given interest rate. If you are making payments on a loan, the future value is useful for determining the total cost of the loan.

Let's now run through Example 1. Consider the following annuity cash flow schedule:


In order to calculate the future value of the annuity, we have to calculate the future value of each cash flow. Let's assume that you are receiving $1,000 every year for the next five years, and you invested each payment at 5%. The following diagram shows how much you would have at the end of the five-year period:


Since we have to add the future value of each payment, you may have noticed that, if you have an ordinary annuity with many cash flows, it would take a long time to calculate all the future values and then add them together. Fortunately, mathematics provides a formula that serves as a short cut for finding the accumulated value of all cash flows received from an ordinary annuity:

C = Cash flow per period i = interest rate n = number of payments

If we were to use the above formula for Example 1 above, this is the result:

= $1000*[5.53] = $5525.63

Note that the one cent difference between $5,525.64 and $5,525.63 is due to a rounding error in the first calculation. Each of the values of the first calculation must be rounded to the nearest penny - the more you have to round numbers in a calculation the more likely rounding errors will occur. So, the above formula not only provides a short-cut to finding FV of an ordinary annuity but also gives a more accurate result. (Now that you know how to do these on your own, check out our Future Value of an Annuity Calculator for the easy method.)

Calculating the Present Value of an Ordinary Annuity
If you would like to determine today's value of a series of future payments, you need to use the formula that calculates the present value of an ordinary annuity. This is the formula you would use as part of a bond pricing calculation. The PV of ordinary annuity calculates the present value of the coupon payments that you will receive in the future.

For Example 2, we'll use the same annuity cash flow schedule as we did in Example 1. To obtain the total discounted value, we need to take the present value of each future payment and, as we did in Example 1, add the cash flows together.


Again, calculating and adding all these values will take a considerable amount of time, especially if we expect many future payments. As such, there is a mathematical shortcut we can use for PV of ordinary annuity.

C = Cash flow per period i = interest rate n = number of payments

The formula provides us with the PV in a few easy steps. Here is the calculation of the annuity represented in the diagram for Example 2:

= $1000*[4.33] = $4329.48

Not that you'd want to use it now that you know the long way to get present value of an annuity, but just in case, you can check out our Present Value of an Annuity Calculator.

Calculating the Future Value of an Annuity Due
When you are receiving or paying cash flows for an annuity due, your cash flow schedule would appear as follows:


Since each payment in the series is made one period sooner, we need to discount the formula one period back. A slight modification to the FV-of-an-ordinary-annuity formula accounts for payments occurring at the beginning of each period. In Example 3, let's illustrate why this modification is needed when each $1,000 payment is made at the beginning of the period rather than the end (interest rate is still 5%):


Notice that when payments are made at the beginning of the period, each amount is held for longer at the end of the period. For example, if the $1,000 was invested on January 1st rather than December 31st of each year, the last payment before we value our investment at the end of five years (on December 31st) would have been made a year prior (January 1st) rather than the same day on which it is valued. The future value of annuity formula would then read:

Therefore,

= $1000*5.53*1.05 = $5801.91

Check out our Future Value Annuity Due Calculator to save some time.

Calculating the Present Value of an Annuity Due
For the present value of an annuity due formula, we need to discount the formula one period forward as the payments are held for a lesser amount of time. When calculating the present value, we assume that the first payment was made today.

We could use this formula for calculating the present value of your future rent payments as specified in a lease you sign with your landlord. Let's say for Example 4 that you make your first rent payment at the beginning of the month and are evaluating the present value of your five-month lease on that same day. Your present value calculation would work as follows:


Of course, we can use a formula shortcut to calculate the present value of an annuity due:


Therefore,

= $1000*4.33*1.05 = $4545.95

Recall that the present value of an ordinary annuity returned a value of $4,329.48. The present value of an ordinary annuity is less than that of an annuity due because the further back we discount a future payment, the lower its present value: each payment or cash flow in ordinary annuity occurs one period further into future.

Check out our Present Value Annuity Due Calculator.

Conclusion
Now you can see how annuity affects how you calculate the present and future value of any amount of money. Remember that the payment frequencies, or number of payments, and the time at which these payments are made (whether at the beginning or end of each payment period) are all variables you need to account for in your calculations.

For further reading on annuities, check out An Overview Of Annuities.

Read more: http://www.investopedia.com/articles/03/101503.asp#ixzz2HIdJ3LQM