Selling structured settlements is nothing new, and it’s becoming increasingly common, particularly as the economy continues to struggle. While ongoing payments in a structured settlement offer stability to payees, there can be an immense need for immediate cash right now. For instance, job loss, back bills, danger of defaulting on a mortgage and other financial concerns can convenience structured payment holders that now is the time to sell. However, buyers face some risks in the process.
One of the first risks that structured settlement purchasers will face is the court process. Selling structured settlements is not a simple, expedient process. Every single sale will have to go through the court so a judge can determine if the sale is possible. One of the first risks purchasers will face is that the judge will deny the sale off the bat. It’s certainly possible, as the law leaves this to the judge’s discretion.
Payees cannot sell structured settlements for just any old reason. For instance, they can’t sell their payments if they want to go on vacation or buy a second home. They can’t sell if they want to use that money to refurbish their homes or to put their children through college. Most states have laws on the books stating that not only must the payee show proof of need that would make the sale necessary, but that the sale itself would be in the payee’s best interest (this is done to keep sales to unscrupulous buyers out of the picture).
It’s tempting to lump both annuities and structured settlements into the same category. After all, they have quite a few similarities, including regular payments over a specified period of time. However, they’re actually very different and the way federal and state laws handle these two financial products is also very different. What is the difference between an annuity and a structured settlement? Let’s take a closer look.
Structured settlements are exactly what they sound like. These are generally the result of a lawsuit involving personal injury or liability, and represent an award in the plaintiff’s favor. The defendant has been found guilty or has chosen to settle rather than go to trial. The settlement amount has been converted from a lump sum into a series of payments over time. These are called deferred payments.
The difference between an annuity and a structured settlement is that annuities are generally financial tools available through insurance companies or investment firms. Lottery winnings often fall into this category too, if the individual opted for the annuity choice rather than the lump sum payment. An annuity is an investment on which the investor earns a return in addition to the original investment amount, and can have various beneficiaries. Annuities come in a wide range of types, as well.
When most people think about winning the lottery, they imagine receiving a huge lump sum of money all at one time. However, the reality is that most people avoid the lump sum payment option when buying their ticket, choosing the “annuity” payout instead. This puts winners immediately into a “structured settlement” arrangement. While lottery winnings might not be the same thing as a personal injury case settlement, the outcome is very similar.
In essence, you are choosing to receive your money in installments over the course of time. The structure of those payments (when, how long, how much per payment, etc.) is usually up to you, so you can choose to have as much or as little structure as you like. You can often choose to structure part of the settlement into payments and receive the remainder as a lump sum upfront, but that is really your decision.
The situation seems simple enough, and the choice to accept payments rather than a lump sum seems like a “no-brainer”. Wouldn’t it be better to receive your money over time, like a paycheck? While it might make sense, it doesn’t always work the way you think it would. When considering what structured settlements are, you’ll need to realize that life has a way of changing the game and once you have opted for a structured settlement and the payout format is in place, it’s pretty much set. Your money will technically be locked away from you, inaccessible except for those periodic payments.
We are disappointed today by John Darer’s blog response to our article of yesterday (see below). While Mr. Darer is entitled to make allegations, conjecture and innuendo to suit his own agenda, whatever that may be, it is our view that such response misses the point.
The point is that Structured Settlement Quotes provides annuitants with the best prices in the industry. Don’t take our word for it. In a decision of the Rhode Island Superior Court on February 11, 2011, a jurisdiction that carefully monitors structured settlement annuitant discount rates, the Court Record finds that the annuitant, an SSQ client, had obtained the best deal out of over 200 cases in the State that had been heard up to that date.
While Mr. Darer may choose not to refer his clients to SSQ for his own reasons, and therefore we regret that we may not be able to help them out, we will continue to do our very best for those who do choose to seek out our service.
Structured Settlement Quotes
Today, we are very pleased to launch our new Structured Settlement Quotes service.
Three months in the making, our new and improved Structured Settlement Marketplace is designed to:
1. Provide helpful information to annuitants thinking of selling structured settlement payment rights; and
2. Enhancing the online interactive experience to better serve our clients, not only striving to get them the best price available in the marketplace today, but also to make our Customer Service Experts more accessible to assist with questions and planning.
We, at Structured Settlement Quotes, are proud of the fact that our clients get the most money for their structured settlement payments by having funding companies compete for their business. In fact, recently we were able to get an annuitant a selling discount rate of 6.99 percent. Our average discount rate to annuitants for 2011 was below 9 percent.
Over the coming weeks we shall be reaching out to the structured settlement broker industry to inform everyone about our service. Some of you already may have received introductory emails from Lisa Newton of our firm.
This author is overjoyed to announce that Section 1 of Vermont's Structured Settlement Protection ACT (or SSPA) went into effect on July 1st, 2012.
Upon passage in the State legislature, sections 2, 3, 4, and 5 become law.