Which would you choose: $2,160,000 or $342,000?

The choice seems obvious, but I assure you for most people it’s not. Let me lay out the details to help you understand the facts behind these numbers and how you may come to realize it’s a more difficult decision than you may think.

Our most recent customer just made this decision and I feel it’s a great example for other annuity holders. He had an annuity policy that paid out a total of roughly $587,000.00 over the span of 18 years. Based on today’s valuation of those payments he was able to sell those future payments rights in order to receive $342,000.00 today.

Here is where most people have a tough time accepting the terms of this transaction. They view it as they are “giving up” $245,000.00. Now that would be true if you put all $342,000.00 in the bank and let it sit for 18 years, which would be a major mistake. As a matter of fact, if that was your plan the transaction would never be allowed by a judge as it would be deemed to be NOT in your best interest.

Instead, he decided it was best to invest the $342,000.00 in his business that generates on average $120,000.00 per year. You see, that $342,000.00 was necessary to keep the business alive as equipment needed maintenance, new equipment needed to be purchased and other outstanding bills needed to be paid in order to maintain the monthly revenue the business generates. That $120,000.00 per year over the same 18 year span as the annuity would result in $2,160,000.00 in gross income for his business.

Too many people focus on what they are “giving up” at the time of an annuity sale as compared to focusing on what they are gaining by obtaining their money now. If you have alternative investment options or business opportunities that will significantly outperform your annuity over the next 10, 15 or 20+ years there is a mindset change that needs to occur to focus on what is gained by selling payment rights. By understanding how your money can work better for you now, instead of trickling in year by year per a contractual agreement with your annuity insurance carrier, you may find that an option like this may be advantageous long term. I hope this example shows you just 1 instance where it’s much better to get your cash now and how we at American Annuity Funding are helping people secure even better financial futures.