Life Insurance Details: Annuity Conversion to Lump Sum

You can choose a life insurance annuity conversion to yield a lump sum from your policy for various purposes. Learn more below about how this process works and some reasons you might consider it.

The Annuity Conversion Process

You will need to sell your annuity to convert it into a lump sum payment. Contact the insurance commissioner in your state or province to find a local insurance broker licensed to perform this process, called a structured settlement. The insurance broker will review your annuity terms and make an offer to purchase the annuity. A fee will be payable to the insurance broker, and you could end up with as little as 1/3 of the total value of your annuity in cash. Review the offer with your financial advisor before signing the conversion contract.

Why Consider Converting Your Annuity to a Lump Sum

In cases of serious illness such as cancer or heart disease, the lump sum payment can help you pay immediate medical costs. Converting your annuity to a lump sum can also help you make your home accessible for mobility devices. If you need to move to a long-term care facility, you can use the cash to repair your home prior to selling it.