Structured Settlements: A Source of Cash

Structured settlements are financial arrangements made between a victim and a defendant in a lawsuit. Other times the cases can involve harassment. Damages are paid out as an annuity with regular fixed amounts and intervals. When there is an accident that involves personal injury due to a fault of one party, often the legal counsel from both parties comes to a negotiated, monetary agreement. The defendant’s insurance company purchases an annuity from a life insurance company to make the payments. The annuity is specifically designed to match the payments.¹ This is in contrast to a lump sum monetary award which is paid out once.

Selling Structured Settlements

In most cases, structured settlements can be converted into lump sum payout by structured settlement buyers, often a third party company. Typically referred to as structured settlement companies, these buyers offer a lump sum of cash payment for the future structured settlement annuity payments. Sometimes these are referred to as factoring companies, although that usually refers to accounts receivable factoring, not structured settlement payments. The lump sum of cash will be at a discount to the resent value of the annuity.

While the two sets of counsel that negotiated the structured settlement had the victim’s best intentions, there may come a time when an immediate, lump sum payout is preferable to waiting for future payments to come in. The only thing certain in life is death and taxes. People need immediate cash for all types of unanticipated occurrences. In short, it’s your money and you are entitled to it when you want it.

Some people want to money to go back to school, buy a home or capitalize on a business opportunity. Small business funding from outside sources can be problematic so having access to cash at your disposal provides real opportunities. Also, some people prefer to sell annuity payments for cash so they can delay taking social security payments. By waiting just a few more years, the Social Security payouts increase substantially. This is a strong factor for many baby boomers pondering the question, should I sell my annuity? Or maybe the reasons are of a more serious nature. Perhaps you’re facing foreclosure or unforeseen medical expenses for yourself or a loved one.

Selling Structured Settlements: How it Works

When an annuitant is considering selling payments, they will contact a structured settlement buyer and receive a quote. This can typically be done online and in you can receive a quote in just a few minutes. We always recommend you get at least three quotes, eventually in writing. This is a very competitive industry so the more quotes you get for your structured settlement payments the better. The buyer will determine the appropriate discount rate and buy your payments at a discount. This is because now the buyer must wait for the payments to come in and be compensated for this.

Unlike selling an investment or retirement annuity, structured settlement annuities usually require a judge signing off on the transaction. This is for the safety of the annuitant, to make sure they are competent and are aware of the specifics of the transaction. Selling structured settlements isn’t for everyone and is a decision that should be carefully considered. Structured settlement pros and cons should be reviewed.

Structured Settlement Reviews

It’s important to get an idea of who the annuity buyers you’re going to be potentially dealing with. It only takes about five minutes to read through one of our structured settlement companies reviews. We feature reviews from the larger players in the annuity buyout space such as Stone Street Capital, Peachtree Financial and of course, JG Wentworth reviews. We also review some of the smaller companies in the structured settlement payment industry such as DRB Capital, Main Street Funding and Client First Settlement Funding. Often, annuity buyers will offer to match or even beat competing offers.

Again, it’s always a good idea to get this in writing and the majority of complaints regarding structured settlement buyers stem from candidates not getting their promised payments during a promotion. It is important because not all structured settlement companies are the same, and some have bad reputations. We will alert you to some of the players who have been accused of harassment, even involved in litigation. Other bad apples we’ll simply omit from our lists. Some of these companies are luckier than the cat with nine lives, often coming back to the industry under different names over and over. Some of the structured settlement companies, especially in South Florida, are simply offshoots of another company where they worked for a number of years, then convinced another worker to leave and start their own company. The key to finding a good company lies in their capital structure. This can tell you a lot about the company’s ability to offer you a fair price and how much the discount rates are likely to be.

¹https://en.wikipedia.org/wiki/Structured_settlement