When considering the many options to sell an annuity, many people ask, "Can I take a loan on my annuity?" They are usually pleased to learn that they can take a loan against their annuity. However, like almost everything in life, there are pros and cons to taking an annuity loan. This is a serious decision that merits much consideration and discussion with a financial advisor. We Pay More Funding is a secondary structured settlement firm that can help you get a loan for your annuity if you want to go this route.
What is an Annuity Loan, and How Can I Take a Loan on My Annuity?
An annuity loan is basically a loan to yourself against an annuity insurance policy you own as collateral. Usually, an annuity loan will only apply to non-qualified annuities. Non-qualified annuities have been used to secure loans for years.
The monetary value of a non-qualified annuity or life insurance product can be used as temporary collateral for a loan. When considering using a qualified annuity as collateral, make sure you consult your tax accountant. To learn more about annuity loans, call We Pay More Funding today. We can inform you about annuity loans and all of your annuity liquidation options.
Did You Know That Annuity Purchasing Companies Take Loans Too?
Something that a lot of people don't know is that every structured settlement and annuity purchasing company takes loans from banks, investors, or other financial institutes to fund our annuity purchasing/loan transactions. The cost of the funding we receive will set the floor for the rates at which we conduct our transactions with our clients. For example, if we borrowed money from a bank to purchase an annuity at 6%, we obviously wouldn't be able to buy the payments for lower than 6%, or we would lose money on every transaction. At the same time, if we bought an annuity at 6%, we would only break even, and there's no sense of being in business to break even. Still, We Pay More Funding has a Best Price Guarantee.
Life contingent transactions, since we will not get the payments upon the death of the annuitant, are riskier for both us and our investors. For this reason, we must hedge against that risk in one of two ways:
1. Buy a life insurance policy - On the disclosure statement of a life insurance policy, there will be a deduction in the expense section. However, not related to our industry, it's getting tougher to find an insurance company that will issue a life insurance policy under these kinds of circumstances.
2. Ascribe value to the conditional risks of buying life contingent transactions - This simply means that the rates go up, and unfortunately, this is becoming the most common way to hedge against annuity-purchasing risks. For a twenty-year-old selling an annuity, the rates are going to be much lower than someone who is sixty-years-old, is a smoker, and has had a heart attack in the past.
Choose We Pay More Funding
If you do a Google search for 'Can I take a loan on my annuity,' find the link that says 'We Pay More Funding.' We are a secondary structured settlement market firm helping our clients find solutions to their financial problems. Call us today for your free written quote.Can I Take A Loan On My Annuity