When it comes to the world of structured settlements, there’s only one authority you need to know about – the National Structured Settlements Trade Association. What is this organization and what is their role in the industry? Why do you need to know who they are and what they represent? If you’re about to start receiving or are already the recipient of a structured settlement, then knowing this organization is important.
The National Structured Settlements Trade Association has been around for quite some time – it was founded in 1984, a year after the US tax code changes that made structured settlements much more common. The organization was created to help benefit individuals working within the structured settlement industry, including attorneys, consultants, insurance professionals and others. Currently, the organization represents almost 1,200 members across the nation.
Ethics and Excellence
The National Structured Settlements Trade Association is dedicated to a strict code of ethics and excellence in performance. They uphold integrity and fidelity, competence in service, fairness, honesty and due care. Of course, they are also dedicated to professionalism for all those they represent, as well as the confidentiality of all information in settlement cases on the part of their members.
To help educate people about structured settlements and the process of selling structured settlements we created this infographic.
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So maybe you are not a math major, and maybe you don’t do iteration based mathematics for fun, does it really mean that you should not be able to calculate present value? For some reason it has been accepted that the concept of calculating present value is complex, difficult to grasp and is used only by sophisticated savvy investors only. Maybe that’s because some sales people benefit from you having no idea of what present value is and how to calculate it, but truth is, the concept is quite straightforward, and anyone who is engaged in an investment decision process should understand it.
A structured settlement factoring company allows an individual who is receiving structured settlement payments to cash out in exchange for a lump sum payment. In exchange for this service, the company collects a fee so as to earn a return on its capital. The company makes a determination as to how secure the future cash flows are, the time value of money and then provides the cash settlement to the recipient, discounting for its perceived level of risk and time.
Receiving structured payments systematically over a long period of time may work for some people, but what if a sudden unforeseen need for cash arises and the fixed payments are insufficient? Banks do not really consider the still-to-be-collected payments appropriate secured loan collateral. Rest assured there are other options.
It is possible to transfer structured settlement annuity payments in case unexpected expenses come up and a lump sum amount of cash is needed. To be able to get lots of cash fast, one needs to contact an individual who is a representative of a structured settlement buyer. These people buy settlements as investments for amounts less than their real worth, and in return will give the seller a lump sum of cash. The seller needs to decide which suits them more, to get the full amount over a long period of time in small quantities, or to collect the lump sum that is less than what they are entitled to.
If you are currently experiencing a shaky financial situation or economic hardship, perhaps you have wondered about selling your structured settlement. A structured settlement is a financial vehicle in the form of an annuity, in which you receive periodic payments resulting from a personal injury settlement.
Structured settlements are popular for the obvious benefits they offer for both parties; the insurance company saves money, while the recipient benefits by receiving a steady tax-free income which could last for many years. While there are many issues to consider should you decide to sell, your first question is probably whether or not it is actually legal.
Have you recently found yourself in the difficult position of needing financial help yet have little or no ready access to cash? Have you suffered unforeseen emergencies, lost your job, or are behind on your mortgage? Whether you are in the midst of seriously hard times, or just want to upgrade your car, pay off your credit card bills, or send your child to college, your structured settlement could offer the relief you need. Structured settlements are payments you receive, usually monthly, as compensation for damages caused to you in the form of injury, crimes, or perhaps hazards at work. These settlements are, in essence, a deferred method of financial payment, agreed upon by both parties, and can be very beneficial in terms of a solid and predictable monthly income.
It has come to our attention that a rumor being spread by a competitor that could affect your choice when choosing a company to work with when cashing out a structured settlement. The false rumor being spread states that certain companies provide extremely competitive quotes as a loss leader on a transaction in order to secure future deals from that particular annuitant from vastly higher discount rates to make up for any loss occurred in the original transaction.
Mike Green, an attorney based out of Philadelphia who represents several structured settlement factoring companies published an informative article on the Settlement Capital blog late last week. There are a couple of points that were mentioned in the article that I would like to discuss.
In the article published by Mr. Green, he explained the concept of an annuity's present value. I would like to provide a few examples on the concept.
Settlement Quotes would like to correct a myth about the pricing of structured settlement factoring transactions that we may in fact have created. Settlement Quotes prides itself on our low discount rates that we supply to our clients who are selling the rights to their structured settlement payments. In the past we have discussed rates in the range of 8-10%, but can these rates translate to every factoring transaction that comes through the door? The answer is no.
Structured settlement factoring is designed to provide liquidity in case of a financial emergency and in most cases should not be used to start an investment fund. Not only are structured settlements tax free, but they are also guaranteed payments from well rated insurance companies.
There are many reasons to sell a structured settlement including:
- college education
- medical expenses
- starting a business
- buying a home
- paying off a mortgage
As repeated several times throughout this blog and the structured settlement secondary market, settlement factoring transactions are priced using discount rates. There are several variables that determine the overall discount rate a transaction receives, including time value of money, future value, court filing fee's, payment stream, misc. costs, and salaries. All of the above variables increase the discount rate due to the expenses the factoring company incurs during the transaction process. Below, we will outline exactly how this effects the bottom line for the consumer.