How Do Structured Settlements Work?

Structured settlements are very common today. You’ll find them in the insurance world, in personal injury and product injury cases, and even with lottery winners. While lump sum payments are still made, structured settlements are the most common option, whether you’re speaking of legal settlements or a lottery payout. How do structured settlements work? What do you need to know about them?

What Is a Structured Settlement?

The first thing to do is understand exactly what a structured settlement is. They’re pretty simple. In essence, a structured settlement takes a specific amount of money awarded to you (through whatever means), and breaks it up into periodic payments. These payments are sent to you over a specified period of time, until the entire amount is paid out.

Benefits of Structured Settlements

When looking to understand how structured settlements work, it’s important to know the benefits offered here. While it’s true that you won’t have all of your money upfront, there are some advantages. For instance, it won’t be possible to spend the money frivolously – this happens more often than you might think. It ensures that you have money coming in that you can count on for some time to come. It also ensures that you don’t have to pay taxes on those installments (when structured correctly).

Cons of Structured Settlements

When looking at how structured settlements work, you’ll certainly find a few drawbacks to the situation. The single largest drawback is that you don’t have access to all of your money, nor can you change the payment situation once it has been set. Therefore, if your living situation changes or you encounter serious financial problems down the road, there’s very little benefit to your payment plan. In fact, it can be very frustrating to know that you have a considerable amount of money due you that could make a very real difference in your life but not be able to get at it.

The Answer

For anyone frustrated with how structured settlements work, there are ways around the situation. For instance, there are companies that will buy your payments for a lump sum. You won’t get 100% of the money coming to you, but you’ll receive it all at one time. Moreover, you can use that money for anything you might need, from paying off creditors to renovating your home. If you choose to sell structured settlement payments, make sure you carefully vet each buyer to find the best choice.

Get Money for Structured Settlement Payments

A definition from the North Carolina Superior Court Judges 2008 Summer Conference states that a structured settlement is an arrangement for receiving periodic payments of damages reached in resolution of a tort claim. The damages may be due to physical sickness or injuries as well as workers’ compensation claims.

Structured settlement payments have received increased popularity in the United States since the 1970s and more than $100 billion has been paid to fund them. The payments are usually received on a periodic basis. However, the installment-like payments do not suit every person. Fortunately, it is possible to get a lump sum payment in exchange for structured settlement payments.

How Do I Sell My Annuity?

Annuitized payments can help offset your bills by providing a stable, reliable source of income over the long term. Most annuities are paid out over a significant period of time (including lifetime payments), which can offer considerable peace of mind for those with a limited income. However, that doesn’t mean that structured payments are ideal for all situations. If you’re asking yourself how do I sell my annuity, chances are good you’re dealing with this type of situation.

Is Your Need Applicable?

First, understand that you cannot sell your annuity for just any old reason. You can’t sell your payments so you can afford a nice vacation. You can’t sell just because you want to buy an RV or want to invest in a second home. All structured settlement sales (including your annuity) have to go before a judge who will determine if there is a need for the sale. That means that the first criteria you have to meet is need – your financial situation must be such that selling your annuity will be beneficial (or vital).

Find Offers

Once you determine if your need is likely to be applicable for sale approval by a judge, you need to find companies that buy annuities. There are plenty of them out there, but it can be hard to locate and contact them on your own. This will require significant legwork and time invested. Once you find several companies, you’ll need to get them to submit an offer and then vet the various offers.

Work with a Reputable Structured Payment Company

There’s an alternative to going it alone in this tricky situation. You can work with an experienced structured settlement company that has connections to the most reputable companies that buy annuities. When answering the question of how do I sell my annuity, having a helping hand in the process is invaluable. With the right brokerage, you can start receiving offers to buy your payments within mere minutes of submitting your information.

It’s not all about speed, though. Another benefit of working with a brokerage is the fact that you benefit from their experience and connections. This company works on your behalf to ensure that not only do you receive offers fast, but that those offers come from reputable buyers rather than unscrupulous companies. As you can imagine, that helping hand can provide some significant peace of mind, as well as a faster process.