Kim Borwick, Financial Editor for
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    Kim Borwick

    Kim Borwick

    Financial Editor

    Kim Borwick is a writer and editor who studies financial literacy and retirement annuities. She has extensive experience with editing educational content and financial topics for

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    Emily Miller

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    Managing editor Emily Miller is an award-winning journalist with more than 10 years of experience as a researcher, writer and editor. Throughout her professional career, Emily has covered education, government, health care, crime and breaking news for media organizations in Florida, Washington, D.C. and Texas. She joined the team in 2016.

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    Janet Berry-Johnson, CPA

    Janet Berry-Johnson, CPA

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    Janet Berry-Johnson is a certified public accountant and freelance writer with a background in accounting and income tax planning and preparation. Janet was named one of the Top 100 Must-Follow Tax Twitter Accounts for 2020 by Forbes.

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  • Updated: August 3, 2023
  • 5 min read time
  • This page features 4 Cited Research Articles
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How to Cite's Article

APA Borwick, K. (2023, August 3). Partial vs. Lump-Sum Sales. Retrieved June 20, 2024, from

MLA Borwick, Kim. "Partial vs. Lump-Sum Sales.", 3 Aug 2023,

Chicago Borwick, Kim. "Partial vs. Lump-Sum Sales." Last modified August 3, 2023.

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We partner with CBC Settlement Funding, a market leader with over 15 years of experience in the settlement purchasing space. Our relationship with CBC allows us to facilitate the purchase of annuities and structured settlements from consumers who are looking to get a lump sum of cash immediately for their stream of monthly payments. When we produce legitimate inquiries, we get compensated, in turn, making stronger for our audience. Readers are in no way obligated to use our partners’ services to access resources for free.

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You don’t have to sell your entire annuity to get a lump sum. Before you decide to sell a single payment, consider the costs associated with selling your annuity payments, the options for selling and how they stack up against the financial consequences of withdrawing funds.

Withdrawing funds from your annuity can come with expensive fees and other penalties. That’s why many people choose to sell the rights to their future payments instead.

Partial Sale: Selling a Number of Future Payments

There are two ways to sell part of your annuity: a partial sale and a lump-sum sale. This flexibility allows you to tailor the transaction to your needs.

In a partial sale, you can either sell your right to receive a certain number of future payments or sell the payments that are scheduled for a certain period of time. The specifics differ depending on the type of annuity you have, how many payments you’ve received, which payments you’re looking to sell, and when the disbursement period ends.

For example, if you bought a 15-year period certain annuity, but you need enough money now for a down payment on a house, you can sell your payments from years one through three in exchange for cash. For those three years, you won’t receive payments, but they will resume when the period ends.

In another example, your structured settlement may pay out $1,000 per month and an additional $5,000 every year for 20 years. You decide to go back to college, and to finance the tuition, you sell your first five annual payments.

Note that you will hear the term “lump sum” used to refer to the single cash payment you’ll receive when you sell your payments in a partial sale. This usage should not be confused with a lump-sum sale, which also provides a single payment — a lump sum — in exchange for a deduction from future payments.

Step 1
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Why are you selling your annuity or structured settlement payment(s)?

Select all that apply

Step 3

Who owns the annuity or structured settlement?

Lump-Sum Sale: Selling a Dollar Amount of Your Settlement or Annuity

The key difference between a partial sale and a lump-sum sale is the ability to specify the exact dollar amount you want to receive from your annuity.

Lump-sum sales allow you to receive a specific amount of money — $20,000 for example — instead of a certain number of payments that might not equal the precise amount you need.

You can customize the way this money is deducted from your payout.

For instance, you might need $85,500 to move your parents into a nursing home. If the factoring company you work with uses a discount rate of 10 percent, you will need to sell $95,000 of your annuity.

Discuss your options with the company that purchases your annuity. And keep in mind that it’s always preferable to sell only what you need. This will mitigate your financial loss.

Read More: Reasons for Selling Your Structured Settlement

Selling Your Annuity in Its Entirety

Of course, you can also sell the full value of your annuity contract. Doing so will liquidate the asset, and you will no longer retain the rights to any future income payments.

Taxes on Annuity Sales

Whether or not you pay taxes on payment sales depends on the tax status of the annuity.

Just as with annuity withdrawals, when you sell payments from an annuity that was purchased with after-tax money, taxes are applied only to interest and earnings. For example, if you buy a $50,000 fixed or variable annuity and the value grows to $75,000, the first $25,000 you sell is taxable. The remaining $50,000 is not subject to taxes.

Because the Periodic Payment Settlement Act and Internal Revenue Code Section 130 allow for tax exemptions for structured settlements, you most likely will not have to pay taxes on the proceeds from your sale if you’re selling payments from an annuity that funds a structured settlement.

Read More: How to Find the Present Value of an Annuity

Selling Additional Payments

One of the biggest advantages to selling some of your payments is the ability to sell more in the future if the need arises.

If you’ve already sold a portion of your payments but another financial emergency comes into play, you have the option of selling additional payments.

As long as you have not depleted your annuity funds, you can make as many transactions as you need to. But keep in mind, each new transaction will result in additional fees.

Stop counting down to future payments

Talk to one of our representatives about converting your annuity or structured settlement into a lump sum of cash.

Frequently Asked Questions About Partial and Lump-Sum Annuity Sales

If you’re considering selling part of an annuity or structured settlement, you may have questions concerning where to begin. As always, you should speak with a financial advisor about your unique situation, but the following frequently asked questions might be of value to you.

Should I sell my annuity?

If your annuity is an integrated part of such a comprehensive plan, then you may benefit from retaining at least a portion of your annuity. But if you and your advisor agree that your portfolio needs to be diversified or you have an urgent need for cash, selling your annuity payments can help you achieve your goals.

What happens after I sell my annuity?

The factoring company will send you your money as agreed. If you sold only a portion of your payments, you will still receive income payments as specified in the terms of your agreement.

What role does a factoring company play in the selling process?

Once you decide to sell your payments, the factoring company will handle the paperwork and send you a lump sum in exchange for the rights to your payments.

Will I need court approval to sell my annuity?

You only need court approval to sell an annuity if your contract is the result of a structured settlement in a personal injury case.

How will I be taxed?

You will have to pay income taxes on the money you receive in the year you receive it.

Please seek the advice of a qualified professional before making financial decisions.
Last Modified: August 3, 2023

4 Cited Research Articles writers adhere to strict sourcing guidelines and use only credible sources of information, including authoritative financial publications, academic organizations, peer-reviewed journals, highly regarded nonprofit organizations, government reports, court records and interviews with qualified experts. You can read more about our commitment to accuracy, fairness and transparency in our editorial guidelines.

  1. Agnew, J.R. et al. (2007, December 18). Who Chooses Annuities? An Experimental Investigation of the Role of Gender, Framing and Defaults. Retrieved from
  2. Elan, S.L. (2010, August). Behavioral Patterns and Pitfalls of U.S. Investors. Retrieved from
  3. Insured Retirement Institute. (2019, October 2). New White Paper Notes Significant Transformation in Financial Advice. Retrieved from
  4. U.S. Senate. (1982, September 8). Federal Periodic Payment Settlement Act in 1982. Retrieved from