How to Purchase Structured Settlement Plans

Those who get in accidents and receive payments from insurance companies as compensation for their injuries often receive structured settlements.  A structured settlement is a series of payments made on a predetermined payment schedule to an individual or group of individuals.  These payments are usually made in an effort to cover future medical expenses and lose of wages due to affects of the accident.  People to whom these settlements are paid have the right to sell them if they so choose.

Those who are looking to sell their settlement are basically saying they would rather have a lump sum of cash now than continue to receive small payments over time.  Once these types of settlements go on the market they make attractive investment options because in exchange for a lump payment now, you receive payments over time that will eventually exceed the payment you made up-front.  The only risk in this investment is if the company who issued the settlement declares bankruptcy, but this can usually be avoided if you properly research the issuing company.

When the seller finally does sell the settlement they receive say 65% of the final value of the settlement, but they receive the payment now.  This can be advantageous if you need the money immediately.  The one who purchase structured settlement will take over receiving the payments for the remainder of the term which guarantees them a regular income.  Obviously this means the purchaser receives more money overall in the long run and makes an above average return on their investment.

There are tons of reasons why someone would want to sell their structured settlement.  Chiefly among these is when someone falls on financial down times.  Typically people who are dependent on a structured settlement are this way because they have not set themselves up very well financially without it.  So when they find themselves in a situation where they need money they are likely to explore options to sell their settlement.  This gives them money now for the long term income.

You can contact your financial planner if you want to know how to purchase structured settlement but basically you will be offered a few options of what type of settlement you want to buy.  You need to consider how frequent you want the payments to be and over how many years.  You can purchase a settlement of your own; where you buy a fund that will pay you back over time with interest or you will buy a settlement someone else is selling.

About Purchase Structured Settlement

Why would a company want to purchase a structured settlement from a person receiving regular installments in compensation for a personal injury? The answer is clear: the company is guaranteed a steady, safe cash flow that is generally not taxable in return for a lump sum of money of about half the value of the full-term settlement. When companies buy a structured settlement they are always getting the better end of the deal, no matter how appealing the quick cash may seem to the seller. These companies are generally not out to make life better for injured persons, but instead are seeking to profit from those persons' pressing financial needs or eagerness to be free from what may seem to many like an allowance. This is why persons wishing to sell settlements need to be very, very careful about who they sell those settlements to.

First of all, exactly what are structured settlements and how do such arrangements work? When a person wins a lawsuit based on worker's compensation, personal injury, or medical malpractice, often the court will rule that compensation be paid in installments, either in small, regular amounts or a few lump sums over the years. Often, these payment plans will cease upon the death of the payee, whether or not there are dependents involved. Before accepting a compromise, injured persons need to work closely with lawyers to ensure that the settlement is going to benefit them to the fullest possible extent in order to prevent future financial distress and the loss of well-deserved compensation. This careful planning will prevent the undesirable necessity of finding a company to purchase a structured settlement from its possessor when he finds that waiting for a monthly check isn't a tolerable system.

If, however, a person has already settled a legal case and finds that the periodic payment plan is not working for him or decides that larger amounts of money are needed immediately in order to purchase medical equipment, a customized vehicle or home to accommodate injuries, or similar items, or does not expect to live long enough to benefit from long-term compensation, may want to consult various companies that offer to buy a structured settlement. Such companies will allow him to sign over annuities in exchange for immediately accessible cash. Persons considering this option should know that while their annuities are not subject to taxation, the lump sum received from a third party may very well be, causing them to lose even more well-deserved money. This is a decision that requires long, hard thought and should not be entered in to hastily or lightly, as its consequences can be disappointing at best and catastrophic at worst. If a person is confident in his investing and money-handling skills, he might be able to pull off the sale of his annuities aptly, but this is not always the case.

In general, this option is a very bad investment decision, as it is possible to lose up to half of one's settlement money in the process. Plus, persons on a periodic payment are often unable to work and need the regular installments to meet their daily needs; if these payments cease and the person is unable to support himself by working due to injuries, his financial need will be much greater than before a company agreed to purchase a structured settlement from him. A Biblical proverb sums up this situation very well: "The simple inherit folly, but the prudent are crowned with knowledge" (Proverbs 14:18). This is a financial decision that could end in folly, especially if rushed into without sufficient forethought and good legal advice.

If a person is absolutely sure that finding a company to buy a structured settlement from him is the most viable option, there are a few ways to ensure that the owner receives the very best deal. First, he should compare quotes at different settlement companies to see which is going to give him the highest payoff with the fewest risks; many online companies allow customers to get a free quote over the Internet. Next, he should be sure that the chosen company has a good reputation for paying its customers in-full and on time and that it is well-funded, licensed, and insured so that it doesn't go bankrupt and leave him with nothing. After selecting a trustworthy company, the person should consult a lawyer to ensure that proceedings are in his favor and that the sum received in return for annuities is reasonable and fair; he may choose to sell the entire settlement or only a part of it--the latter, of course, is the best choice. By following these steps, selling one's settlement may be a safe, prudent, and beneficial option for a person in financial distress.

It is important to know that selling one's annuities is not always a possibility. About one-third of states have laws that do not allow businesses to purchase a structured settlement, and some insurance companies are not willing to transfer annuities to another entity. In this case, a person will have to find another solution for their financial needs besides selling. Persons who are unsure whether their state of residence restricts such sales should consult a lawyer for advice. For the other two-thirds of the country, however, finding a company to buy a structured settlement is a feasible, if not advisable, option--a last resort for the financially stressed, sure to offer immediately accessible funds in a very short time frame.

Understanding Annuities Prepares You For Retirement

People more than ever need to take control of their retirement plans. The old fall back option of a state pension or of a pension from a previous employer is unlikely to be able to provide anything more than a basic existence, and that is scant reward for a lifetime of dedication and effort. The annuity is an investment vehicle which many find complex and difficult to understand, yet understanding annuities has the undoubted potential to make your retirement more secure and more rewarding than would otherwise be possible.

Annuity structured settlements are a unique financial contract, and there are many pitfalls which can trap the unwary. The good news is that understanding annuities can pave the way for some very intelligent investment choices to be made. The first essential point to grasp is that annuities can vary greatly in the amount of risk involved, and you can tailor them to your own requirements. If you choose a fixed annuity, the interest you earn in the initial stages will be fixed and guaranteed, providing the most solid financial base possible for your strategic investment program.

If you have other solid investments and are able to assume a slightly higher profile of risk, you can try to obtain higher rewards with variable annuities. The possibilities for investing the money are far greater, so these will appeal to those who desire a greater personal input. There is inevitably a greater exposure to risk when you are dependent to a degree upon the stock market, but careful selection of mutual funds can stack the odds dramatically in your favor.

Being unfamiliar with this type of financial vehicle, it is vital that you have annuities explained to you. Before you even think about where to invest your money, learn as much as you can about annuities from the Internet, financial magazines and books. When you have a good basic knowledge of the subject, you will be able to talk to a financial adviser about your future in a meaningful way. This is critical in getting your final choices right.

Finding the right combination of fixed and variable annuities can give you the perfect mix of guaranteed future income, and the possibility of greater rewards. Be sure when you choose this option that you are able to commit to your investment program for the long term. One of the great downsides of investing in annuities is that they invoke penalty clauses if you cash them in early. You can sidestep this by making sure that you only commit what you can comfortably afford to maintain. Make sure also that you are made fully aware of all relevant fees and deductions before you part with any money. You can avoid the pitfalls, and profit greatly during your golden years, by truly understanding annuities.

Great overview on how to purchase structured settlements

Buy structured settlements, and you’ll have to give the purchaser a lump sum for the contract you’ll obtain. This is a business which has a possibility to generate constant and steady benefits, because the marketplace in structured settlements is growing continuously. The main reason for this is the fact that courts have integrated structured settlements into the procedure for awarding compensation to victims of accidents, and injuries caused through negligence of malpractice. Due to the need for some people to get their entire award in a single payment, now there is a big market in these instruments.

The size of this market is as well grown by the undeniable fact that many states are unlikely to alter from the common annuity award which provides the beneficiary the legal right to payment during a period of time. The explanation for that is simple enough, in that state authorities are worried that many people don’t have the necessary financial acumen to be capable to handle a big award. There exists a risk that they might lose their investment, and then the state might face more expense in assisting the victim satisfy the requirements.

Although this response is to a degree easy to understand, it does place serious limitations upon people who want to take control of their own future, for whatever reason. It may be simple things like wanting to pay some outstanding bills and tie up reduce ends so that the person receiving the award can start to completely focus on their own life, or it may be something a lot more important. Probably the recipient of the award desires to start a business which is why they need money, or maybe they would like to invest in real estate.

The restrictive laws may be worked around by utilizing companies that purchase structured settlement agreements. This isn’t as good a solution as applying to the court for the award to be changed to a one time payment. However it may at least enable you to accomplish your goal. The companies that accept to buy structured settlements certainly have to take their own cut and make money from what they do, so that will have to be paid for in mind.

Look around and search at a number of companies that purchase structured settlement, but do not decide on price only. Even though it’s a firmly controlled area, there are still a few companies that are much better than others, and employees who truly try to serve the client in the best way possible. The important consideration isn’t to hurry into anything, however spend some time and obtain as much opinions as you can. Always trust your own intuition. If something does not feel right, then it probably isn’t. Spend some time and find one of the numerous trustworthy companies who buy structured settlements.

Reasons Companies Buy Structured Settlements

Companies that buy structured settlements do so at a profit. The amount received by an individual selling either a part or the complete settlement is not the same as the value of the structured settlements sold. The money these companies earn is invested are used to run the company, pay employees, and advertise. A financially healthy structured settlement company is a safer option for an individual as there is less chance of the company going bankrupt. Also, the market standing of such a company would allow it to offer the best rates to their clients, use their own money to pay the clients. If they decide to take services of a broker, they will have to factor in the broker's charges which are ultimately paid by the structured settlement owner. Companies want to buy structured settlements because it guarantees a safe cash flow and is not taxable. Individuals use these companies who buy structured settlements when they are in need of quick cash and would like to swap their structured settlements for cash. There is not much work involved for those who buy structured settlements. The main effort is in marketing and obtaining court approval. The fact that structured settlements are guaranteed means that structured settlement companies can obtain debt at low interest rates and finance other ventures with that debt.