Cash for Annuity Payments: Tips on Selling Your Annuities

Shawn Plummer

CEO, The Annuity Expert

There are many reasons why cash-for-annuity payments may be a good idea for you. For example, you might want to cash in your annuities because of the current low-interest rates or because you need cash now and can’t wait until retirement. The decision is yours, but if you decide to cash in your annuities, one thing that will help improve your conversion rate is knowing when you should cash out.

Can You Cash In An Annuity At Any Time?

Structured settlements and annuities are usually cashable at any time. The withdrawal process for a structured settlement can take 45-90 days. The withdrawal process for other annuities takes about four weeks.

I Have An Annuity, and I Need Cash Now. What Are My Options?

Depending on your type of annuity, there are several ways to collect cash immediately, sometimes without any penalties. Here are several methods:

  • First take the allowed penalty-free withdrawal. There are no penalties or fees. Penalty-free withdrawals reset at anniversary dates. If you are nearing an upcoming anniversary date, you could stagger the penalty-free withdrawals for this year and next year shortly after.
  • Second, find out if the annuity allows for you to take a loan against the policy.
  • Third, determine if the annuity offers a Nursing Home, Long-Term Care, or Terminal Illness Waiver.
  • Then, if you are collecting annuitized annuity payments, find out if there is a Commutation Withdrawal,which allows the owner to elect a one-time withdrawal from the annuity’s present value.
  • After exhausting the penalty-free methods, surrender only the amount of money you need above the penalty-free withdrawal amount. This will save money on penalties and fees.
  • Finally, sell the annuity to a third party at a discounted rate. This should only be exercised as a last resort.

Can I Get Cash For My Annuity?

Annuities provide a steady stream of income. However, sometimes people’s needs change, and they must reevaluate their annuity. This is especially common in cases of emergencies or new opportunities.

If you take your money out of your annuity early, you must pay more taxes and higher fees. But if you wait a few years, the tax and fees will be lower.

But what if you need money now because you can’t wait?

You might get more money now if you sell payments on the secondary market instead of withdrawing from your annuity account. However, you will sell your annuity at a discount and lose money.

Helpful Tip: annuity payment calculator

How Do I Cash Out An Annuity?

If you need to cash out your annuity, the first step is to contact your insurance company and request an annuity surrender form. Next, decide whether to surrender the entire amount or a partial amount. Then, please complete the surrender form and return it to the insurance company. They will process it and send you a check for the amount you’re cashing out.

Tip* Find out if the insurance company can withhold taxes on your behalf and send them to the IRS or pay the taxes to the IRS yourself at tax time.

Is It Smart To Cash In An Annuity?

Surrender Charges

Annuities typically have surrender charges if you cash out the annuity before a certain period. Surrender charges are usually a percentage of your annuity’s value and usually decline over time. Therefore, the earlier an annuitant wants to cash in an annuity, the higher the fee. The more they wait, the lower the fees.

You can save money by waiting a little longer before you sell your annuity. Ask your insurance company if there are any surrender fees when you cash out and what they are.

Tip: Another way to save money is to utilize a penalty-free withdrawal first, then cash in the annuity. Your annuity’s value will decrease after the withdrawal, saving you money if you must cash in the annuity now.


If you take a lot of money out of your annuity all at once, it may mean that you have to pay taxes.

If you own a non-qualified annuity, all gains you have received from your annuity will be taxed. If you own a qualified annuity, all withdrawals you receive from your annuity will be taxed.

If you have to pay a lot of taxes for selling your annuity, make sure it’s worth it.

If you wait until retirement, when your income is lower, it may save you money on taxes.

If the annuitant makes an early withdrawal before the age of 59 ½, they will face a 10 percent early withdrawal penalty, surrender charges, and ordinary income tax.

Can You Take Money Out Of An Annuity Without Penalty?

Typically, deferred annuities allow an annuitant to withdraw money from the annuity each year, called a penalty-free withdrawal. The standard penalty-free withdrawal amount is 10% of the annuity’s value annually.

Can I Withdraw All My Money From An Annuity?

You may have to pay the penalty or a withdrawal fee when you take all the money out of an annuity. Penalties are meant to stop people from using a deferred annuity for a short-term investment.

Before The Surrender Period Is Completed

Annuity contracts include a penalty called surrender charges for withdrawing money before the surrender period has expired. The surrender charge for an annuity will decrease each year. The first year is high, but it gets smaller and smaller until finally, the company does not charge any penalties.

After The Surrender Period Is Completed

Typically there are zero surrender penalties after the surrender period has been met.

Return of Premium

Some annuities offer a liquidity feature called Return of Premium (ROP) that allows annuity owner to receive their original premium back at any time without a penalty. The downside to the return of premium feature is that the annuitant only receives the original investment, and no interest is earned.

Cash For Annuity Payments Advice

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Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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