When an employee retires after several years of work, the employer offers monetary retirement benefits as a gesture of gratitude for the employee’s service. A pension is one such benefit for government employees.

Let’s consider one Mr. Benson. He likes to invest his retirement package in something that will yield a regular monthly income. He invests his retirement package in an insurance company by drawing a mutual agreement between him and the company. According to the agreement, the insurance company makes periodic payments to Benson. That is, the insurance company ‘sells’ annuities to Benson. Sometimes, even people who have not retired invest their money in annuities so that they can receive a regular income.

Suppose Benson wants to buy a house. For this he needs money. Can he use his annuity for this purpose? Though his whole retirement benefit package is with the insurance company, he cannot withdraw any part of the amount during the agreed time period, known as the ‘surrender period’, without paying some ‘surrender charge fees’ as a penalty. Suppose Benson bought an annuity with a 10-year surrender period. If he wants to withdraw some of it, he may have to shell out a 10 percent fee in the first year, 9 percent during the second year, and so on. Thus, annuities work like a bank certificate of deposit.

Considering this difficulty, the Federal and state governments have introduced provisions so that Benson can sell his annuity payments and obtain immediate cash. There are finance companies that can buy a person’s annuities and pay him immediate cash in return. The process works as follows.

The person calls the finance company or requests a quote, by phone, email, online or in person. The company offers several options that meet the person’s financial needs. Once the person selects the option, the company completes the application process. The applicant is provided with a disclosure statement and a contract, which he will sign and get notarized. The finance company collects the contract, along with relevant documents, processes the application and submits them for approval to the court. The court reviews the application to confirm if it is in the best interests of the applicant. It is obligatory for the finance companies to follow all relevant state and federal laws in the process.

Once the court approves the application, the finance company notifies the applicant’s insurance company of the transfer. Cash is transferred to the applicant in just a few days.

It is important to see that the insurance firm and the finance company are licensed, and that all transactions are approved by a court order.