An annuity can be quite attractive for people who wish to receive a fixed monthly payment to manage themselves better. Many insurance companies provide this service with perfect installments.
The only problem is that it can become difficult to have direct access to your money since you give a large portion of your savings to the insurance company for them to transfer to you every month.
How can I withdraw my annuity money?
Not all insurance companies allow the withdrawal of your annuity payment; others do so under strict conditions, such as a person diagnosed with a terminal illness. Many people prefer not to opt.
Most companies will always allow you to withdraw it for any need, as long as it is duly informed. The most common is unexpected medical expenses, such as an accident injury needing hospitalization or surgery.
Also, specific terminal illnesses, such as cancer, will produce an avalanche of expenses that must be paid. Your insurer will provide you with a list of conditions for which your annuity can be reimbursed.
Another common circumstance for which you could withdraw your annuity is the need to pay off a credit card debt. Sometimes the amounts are excessive, and assistance is necessary to pay them.
Also, tuition for a family member or your own will always be important to report. Retirees often use their money to pay for their children’s or grandchildren’s education.
When you are faced with a valid reason to cancel your annuity and have the insurance company return the money, you should inform them in advance. You will probably have to go to a company office and explain everything.
Frequently, you will need to comply with some requirements to start the procedure, such as medical diagnosis or identity documents. Depending on the amount, the time it takes to deliver it will vary.
How long does it take to withdraw your annuity?
The waiting time for an annuity withdrawal to be executed depends on the type of annuity and the previously established agreements. For example, some annuity agreements will allow you to withdraw after a surrender period.
It usually takes four weeks for the withdrawal, depending on the speed of the insurance and the purchaser. Although it may seem like a long time, you must remember that it is also a large sum of money; it is not something to have tucked away under the mattress.
Moreover, they have to go through legal and judicial approvals to be able to apply for the withdrawal. In most cases, you will always be able to withdraw, but if you are under 72, you will get a penalty from the IRS.
When you want to apply for a withdrawal, you have to consult all the rules of your annuity since, in some cases, they will not even give you the full amount. It is paramount to always read the fine print in contracts.
In structured settlements, it takes even longer to withdraw due to judicial issues, sometimes reaching 60 to 90 days to receive the money. Because of this, it is best not to rely entirely on the annuity money in an emergency.
But it will serve you well if you can wait to make that major expense that has led you to cancel it. Although you receive the money, you will still have to report it to the IRS.
But if you have a large sum of money saved with the insurance company, it will probably take longer than four weeks for a normal withdrawal.
When I die, can my family members withdraw the money?
The best answer is no because, in most cases, an annuity is for life, and the company will keep the money the day you die. No matter what the amount is, it cannot be collected.
In the case of spousal annuities, if you die, your partner will not be able to withdraw the money. However, he or she will continue to receive regular payments. On the day your spouse dies, if there is any money left over, the insurance company will also keep it, regardless of the surplus.