You have probably heard the term “Structured Settlement” on a television or print ad and wondered what it meant. After all, the term is not a part of our everyday lexicon.
A structured settlement is a contract under which an insurance company undertakes to make periodic payments to an injured party as part of a bodily injury claim settlement or to a surviving family member to whom a large settlement has been awarded. These are just two examples of where a structured settlement might be used. Structured settlements have become popular because they offer substantial benefits to all parties involved in the settlement agreement.
A brief review of the dictionary reveals the following definition: a structured settlement is simply a financial package that permits a settlement to be paid in regular payment installments for either a set period of time or over a lifetime. In short, a structured settlement is a package that is tailor made for the individual or payee by the payer or an interested third-party. Some structures include immediate payment to cover any special damages that may have occurred or will occur.
The system of structured settlements was first introduced in Canada in the early 1970’s and spread into the United States very quickly. Within a few years, the idea had found its way to many countries including Australia and most member states of the European Union.
Benefits of a Structured Settlement
A structured settlement annuity provides a payment stream that is tax-free over a determined period of time. Most investment options such as stocks and bonds, real estate, savings accounts, and similar vehicles simply cannot match the flexibility and security of a Structured Settlement Annuity.
Another benefit of a structured settlement annuity is that it can be designed so that payments are made over an extended period of time, even throughout the life of the payee. In the event of the recipient's death, a guaranteed portion of the settlement may be paid to the person's estate or to a named beneficiary.
Structured Settlements have become quite common and offer the additional security of regulation by both Federal and State statutes. There are also provisions in IRS and Medicare/Medicaid guidelines which take them into account.
Alternatives to Structured Settlements
It’s quite easy to see that a structured settlement can work to the advantage of all parties in a variety of circumstances. However, there are occasions when the beneficiary of a structured settlement would prefer not to have periodic payments, preferring instead a lump sum payment. Such might be the case where an individual would like an amount of money to purchase a home, perhaps to cover large medical bills or to pay off a mortgage.
This option has also proved especially popular with lottery winners. There are a number of insurance companies and others that provide this service for a fee. In such instances the insurance company or another interested third-party makes the lump sum payment with a charge for expenses and interest deducted. It is important to consider these fees and read the fine print carefully to be sure that you are not signing away the bulk of your payment.
How do the alternatives work?
The settlement contract is sold to a financial institution which then accepts the periodic payments from the payer and gives the beneficiary a lump sum. Commonly, the financial institution involved will be another major insurance company.
The insurance company charges a handling fee which will usually be calculated to take into account adjustments for interest charges and handling costs. Again, if you are considering taking this option you must bear in mind that the company buying the payments for a cash sum is in business to make money. The amount of the one-off payment will certainly be considerably less than the gross amount that would have been received over the original extended period.
Unless the amount of the lump sum is very substantial and the recipient can be sure of consistent investment income, it’s almost certainly going to be better to stick with the original arrangements. An exception might be where the recipient is a younger person in good health with a substantial expectation of gainful employment for the long term.
Again, as with any contracts be sure to read and understand the terms of the agreement you are making. Make a list of questions and ask until you understand. It is also a good idea to cast a wide net when looking for an alternative to structured settlements as fees and services; and thus your bottom line can vary greatly.
Guide to Selling a Structured Settlement
Many people throughout the world have structured settlements or annuities with the desire of turning these future payments into a lump sum of cash. In other words they wish to sell their future or periodic payments.
This is SSQ's official guide to selling structured settlements.
1) Determine the exact amount of money that you need and the reason that you are cashing out your fixed income.
2) Next you need to find out your payment details. This can be accomplished by calling the company or entity that is making your periodic payments (usually an insurance company). For example, they will state you are receiving 146 additional payments of $500 per month.
3) With the payment details established, you will be able to estimate the total amount left to be paid. Most structured settlement factoring companies customize the payment plans for their clients. Perhaps you would like to sell the first half of your payments and keep the second half for some fixed income.
a) Discount rate- As defined by Wikipedia: The discount rate is based on the
future cash flow in lieu of the present value of the cash flow.
b) There are varied discount rates associated with each payment plan that
you choose. The payments that are further away will have a higher
discount rate and are worth less money.
4) After deciding which payment plan best suites your needs, it is time to find an ethical and trustworthy structured settlement factoring company.
a) Shopping around has been the most effective way to receive the most money for your structured settlement payments. Log on to this site to see the information needed to process your structured settlement quote. http://www.structuredsettlement-quotes.com.
5) As you begin to receive quotes from the factories settlement companies, it is a good idea to obtain your annuity contract from the insurance company or entity making your payments. This step is necessary to secure the quote from the structured settlement factoring company. It is always good idea to get a second opinion from a financial advisor. This is not required but recommended.
6) Once you begin to receive quotes from the factoring companies it is a good idea to check the Better Business Bureau to find out if there have been any complaints against any of these companies.
7) Once you have chosen a factoring company an interview process will occur and several documents will be required to begin the process. Specific information about your structured settlement will be needed. The process can be facilitated much quicker if all the information is collected prior to the interview process. At the minimum this takes between 3 to 10 days.
8) Once the factoring company receives the documents, the underwriting process occurs. This takes between three weeks and several months to complete.
9) Upon completion, the factoring company submits the settlement to the court where a judge will approve or disapprove the transfer of payments based upon the client’s best interest. The factoring company typically covers the fees associated with this process. You are under no obligation to go to court with the factoring company, however seek the advice of your financial advisor as each case is unique.
10) Once approved, arrangements are made with the factoring company for the transfer of your funds.
This is SSQ's official guide to selling structured settlements.
1) Determine the exact amount of money that you need and the reason that you are cashing out your fixed income.
2) Next you need to find out your payment details. This can be accomplished by calling the company or entity that is making your periodic payments (usually an insurance company). For example, they will state you are receiving 146 additional payments of $500 per month.
3) With the payment details established, you will be able to estimate the total amount left to be paid. Most structured settlement factoring companies customize the payment plans for their clients. Perhaps you would like to sell the first half of your payments and keep the second half for some fixed income.
a) Discount rate- As defined by Wikipedia: The discount rate is based on the
future cash flow in lieu of the present value of the cash flow.
b) There are varied discount rates associated with each payment plan that
you choose. The payments that are further away will have a higher
discount rate and are worth less money.
4) After deciding which payment plan best suites your needs, it is time to find an ethical and trustworthy structured settlement factoring company.
a) Shopping around has been the most effective way to receive the most money for your structured settlement payments. Log on to this site to see the information needed to process your structured settlement quote. http://www.structuredsettlement-quotes.com.
5) As you begin to receive quotes from the factories settlement companies, it is a good idea to obtain your annuity contract from the insurance company or entity making your payments. This step is necessary to secure the quote from the structured settlement factoring company. It is always good idea to get a second opinion from a financial advisor. This is not required but recommended.
6) Once you begin to receive quotes from the factoring companies it is a good idea to check the Better Business Bureau to find out if there have been any complaints against any of these companies.
7) Once you have chosen a factoring company an interview process will occur and several documents will be required to begin the process. Specific information about your structured settlement will be needed. The process can be facilitated much quicker if all the information is collected prior to the interview process. At the minimum this takes between 3 to 10 days.
8) Once the factoring company receives the documents, the underwriting process occurs. This takes between three weeks and several months to complete.
9) Upon completion, the factoring company submits the settlement to the court where a judge will approve or disapprove the transfer of payments based upon the client’s best interest. The factoring company typically covers the fees associated with this process. You are under no obligation to go to court with the factoring company, however seek the advice of your financial advisor as each case is unique.
10) Once approved, arrangements are made with the factoring company for the transfer of your funds.
Is a Structured Settlement Right for you?
If you had the misfortune of being involved in an accident of some type, a
Structured Settlement may be in your best interest. A structured settlement
can help you gain the financial security and protection for you and your family
over the years to come. The simple truth is, you don't know what kind of problems
can develop further down the road from the results of your injuries. This could
put you in a hard position if you weren't prepared.
There are several things to think about when it comes to structured settlements.
The first is the fact that you'll be compensated by installment payments over
the course of time, rather than receiving a large lump sum. This can be very
important in that, if you were to receive one large lump sum and didn't manage
your money wisely, you could put yourself into financial instability. If you develop
problems down the road from your prior injuries, it could be the beginning
of a finacial downward spiral. This could also put massive strain on your family and
possible do more harm than the injury itself.
Another thing to keep in mind is your structured settlement payments are 100%
tax-free. This could be another reason to consider this option.
However, the best option to choose will be different for everyone because of
each individual's unique situation. You see, it's very possible that the best
option for someone else, could be one large lump sum up front. This is actually
quite often the case, but you need to be very careful on how you handle the
sale of you structured settlement.
There are many companies out there that will buy your structured settlement and
pay you cash now, but you really need to do some exploring and find out
what's best for you in selling your structured settlement.
Choosing the right specialty finance company to work with is an important
decision, and many people do not know where to turn for advice. There
are great firms that are designed to help you get the most money for your structured
settlements and annuity payments. Many of these firms make this process very
easy for you by matching you with the best possible financial institution to
handle your settlement, and letting you decide how to proceed, putting the control
where it should be, in your hands.
Structured Settlement may be in your best interest. A structured settlement
can help you gain the financial security and protection for you and your family
over the years to come. The simple truth is, you don't know what kind of problems
can develop further down the road from the results of your injuries. This could
put you in a hard position if you weren't prepared.
There are several things to think about when it comes to structured settlements.
The first is the fact that you'll be compensated by installment payments over
the course of time, rather than receiving a large lump sum. This can be very
important in that, if you were to receive one large lump sum and didn't manage
your money wisely, you could put yourself into financial instability. If you develop
problems down the road from your prior injuries, it could be the beginning
of a finacial downward spiral. This could also put massive strain on your family and
possible do more harm than the injury itself.
Another thing to keep in mind is your structured settlement payments are 100%
tax-free. This could be another reason to consider this option.
However, the best option to choose will be different for everyone because of
each individual's unique situation. You see, it's very possible that the best
option for someone else, could be one large lump sum up front. This is actually
quite often the case, but you need to be very careful on how you handle the
sale of you structured settlement.
There are many companies out there that will buy your structured settlement and
pay you cash now, but you really need to do some exploring and find out
what's best for you in selling your structured settlement.
Choosing the right specialty finance company to work with is an important
decision, and many people do not know where to turn for advice. There
are great firms that are designed to help you get the most money for your structured
settlements and annuity payments. Many of these firms make this process very
easy for you by matching you with the best possible financial institution to
handle your settlement, and letting you decide how to proceed, putting the control
where it should be, in your hands.
Who Will Handle Your Structured Settlement?
When it comes to selling your structured settlement, many people simply don’t know where to turn for advice. Choosing the right specialty finance company to work with is an important decision, and one well worth investing a little time in. This process can be a bit overwhelming but don’t let it be. A little homework will go a long way.
You want to try and find a company that has your best interest in mind, as well as offering you the best purchase deal.
It’s advisable to use a specialty finance company. Many of these firms make this process very easy for you by matching you with the best possible financial institution to handle your settlement, and letting you decide how to proceed. This allows you the control you rightfully deserve.
Remember, this is your structured settlement and you have the right and desire to get the best possible deal for it. This is the very reason you’ll want to do some homework prior to making your decision.
Another thing to keep in mind is that you’ll probably be facing a few weeks before the actual deal is completed. This process does not happen overnight, where you’re walking out with money in hand the same day. Beware of this, as you could be misled into thinking that you may be paid that very day or the next day. Nothing is impossible, but you have to ask questions and be aware of these issues.
Your structured settlement payments are 100% tax-free. Whether that makes this option appealing to you or not there is another issue you must consider.
If you decide to sell your structured settlement and get a big lump sum, it’s crucial that you have a budget plan for how you will use the income.
Do not make the unfortunate and sad mistake of spending all of your money in a short time, only to find that you need further medical attention, or any other money needed circumstance that may arise, and find you’re out of loot.
This could indeed be a huge blow to your financial well-being, and quite possibly cause irreversible damage to your credit and to your family in general.
Having a solid financial plan in place will assure you the best results down the road when it really matters most.
You want to try and find a company that has your best interest in mind, as well as offering you the best purchase deal.
It’s advisable to use a specialty finance company. Many of these firms make this process very easy for you by matching you with the best possible financial institution to handle your settlement, and letting you decide how to proceed. This allows you the control you rightfully deserve.
Remember, this is your structured settlement and you have the right and desire to get the best possible deal for it. This is the very reason you’ll want to do some homework prior to making your decision.
Another thing to keep in mind is that you’ll probably be facing a few weeks before the actual deal is completed. This process does not happen overnight, where you’re walking out with money in hand the same day. Beware of this, as you could be misled into thinking that you may be paid that very day or the next day. Nothing is impossible, but you have to ask questions and be aware of these issues.
Your structured settlement payments are 100% tax-free. Whether that makes this option appealing to you or not there is another issue you must consider.
If you decide to sell your structured settlement and get a big lump sum, it’s crucial that you have a budget plan for how you will use the income.
Do not make the unfortunate and sad mistake of spending all of your money in a short time, only to find that you need further medical attention, or any other money needed circumstance that may arise, and find you’re out of loot.
This could indeed be a huge blow to your financial well-being, and quite possibly cause irreversible damage to your credit and to your family in general.
Having a solid financial plan in place will assure you the best results down the road when it really matters most.
Sell Your Structured Settlements - Why, When and How!
With a structured settlement, you do not simply get money at a regular interval to cover your basic living costs and other expenses like medical costs; you also have the option to sell the right at any point of time to get a lump sum amount to meet up sudden needs.
At the same time, you can also settle for periodic payment options to cover occasional costs like education, marriage if you have other means to support you in regular life. In reality, a structured settlement offers you enough flexibility to plan your income depending on your financial conditions.
To add to this, the amount you receive on a regular interval is completely free of federal or state tax. Whereas if you had taken a lump sum amount and invested them otherwise to earn a monthly income, you would have ended up in paying a big part of your earning as tax. For the last comment, we assume that the concerned person have invested the amount wisely. These are reasons enough that people in general love to get a secured structured settlement instead of a onetime lump sum amount.
Nevertheless, here comes the crux – why, when and how do you sell your settlement in an urgent need! Say, you settled with your company for a monthly coverage option but all of a sudden, you got yourself deep in soup and needed some liquid cash urgently. What would you do if you do not have any other option to support yourself with a lump sum amount! If this is not enough, you may find some people who sell their settlement to get lump sum amount to start their own business or to build their portfolio. If there is no option left, you can sell the right of your structured settlement and Government allows you the provision to do so.
Many companies purchase the structured settlement rights at a discount price. The amount you can get depends on your attorney’s negotiation skills and market reputation of your previous employer and other conditions. Often the settlement purchaser demand for a higher discount rate not only to cover all the risks involved in the process but also to draw a bigger profit margin. There is a common misconception that you must sell all the annuities at one go. However, here you have all the flexibilities to sell your annuities partially and thus you can sell only as much as needed to overcome the immediate expenditure. The rest can be left, as it is, to cover your regular expenditure. The first thing you need to do is to hire a professional financial advisor and/or an attorney to get the best
deal for you. An attorney can guide you further through the legal procedures like court oversight, consumer protection statutes and legal approvals for selling structured settlements.
At the same time, you can also settle for periodic payment options to cover occasional costs like education, marriage if you have other means to support you in regular life. In reality, a structured settlement offers you enough flexibility to plan your income depending on your financial conditions.
To add to this, the amount you receive on a regular interval is completely free of federal or state tax. Whereas if you had taken a lump sum amount and invested them otherwise to earn a monthly income, you would have ended up in paying a big part of your earning as tax. For the last comment, we assume that the concerned person have invested the amount wisely. These are reasons enough that people in general love to get a secured structured settlement instead of a onetime lump sum amount.
Nevertheless, here comes the crux – why, when and how do you sell your settlement in an urgent need! Say, you settled with your company for a monthly coverage option but all of a sudden, you got yourself deep in soup and needed some liquid cash urgently. What would you do if you do not have any other option to support yourself with a lump sum amount! If this is not enough, you may find some people who sell their settlement to get lump sum amount to start their own business or to build their portfolio. If there is no option left, you can sell the right of your structured settlement and Government allows you the provision to do so.
Many companies purchase the structured settlement rights at a discount price. The amount you can get depends on your attorney’s negotiation skills and market reputation of your previous employer and other conditions. Often the settlement purchaser demand for a higher discount rate not only to cover all the risks involved in the process but also to draw a bigger profit margin. There is a common misconception that you must sell all the annuities at one go. However, here you have all the flexibilities to sell your annuities partially and thus you can sell only as much as needed to overcome the immediate expenditure. The rest can be left, as it is, to cover your regular expenditure. The first thing you need to do is to hire a professional financial advisor and/or an attorney to get the best
deal for you. An attorney can guide you further through the legal procedures like court oversight, consumer protection statutes and legal approvals for selling structured settlements.
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