What Are Structured Settlements?
A structured settlement is an arrangement where a plaintiff who has been awarded a large sum of money has agreed to accept regular payments rather than one large payment. This may be an insurance settlement, a personal injury claim or some other type of lawsuit settlement. Another good example would be lottery winnings that are paid over 20 years rather than all at once. This is not exactly a structured settlement but an example of a similar arrangement. It should be noted that structured settlements can be modified to adhere to inflation expenses like a higher cost of living over the years and future expenses that are anticipated to arise.
Structured settlements may also be referred to as annuity payments. There are instances where the recipient of a settlement may not want payments stretched out over a period of time. They might need a lump sum of money to take care of large expenses. For example, let's say a plaintiff is injured, and permanently disabled, in an accident that is no fault of their own. They are awarded a structured settlement. While this may take care of their monthly or yearly medical bills and living expenses, it may not take care of other necessities.
For example, this individual may need to make modifications to their home to make it handicapped accessible, such as adding ramps or wheelchair lifts. These types of renovations can be very expensive, which is one reason the plaintiff may want their settlement all at once. A solution can be to sell the annuity. There are buyers who will purchase the structured settlement, however it is for a price lower than the total original value. This can be a win-win situation if the plaintiff can live with less money. The buyer gets a profit from buying the settlement at a discount price, and the seller gets the lump sum of money they need.
If you are the recipient of annuity payments and wish to sell, one place to look for buyers is on the Internet. There are websites where you can contact buyers who want to buy structured settlements. These websites should provide you with ample information about the company and give you clear contact information so you can talk to a representative and have all your questions answered. You might also see television commercials that offer to purchase structured settlements, lottery payments and other similar payments in exchange for a lump sum. Just as you would choose any other product or professional service, compare different companies before making a decision. There are lots of good buyers out there, but by comparing them you can make the most informed decision about which one is best for you.
Before you sell your annuity, speak with a financial advisor to find out whether or not this is the best option for you. In some cases, you may be better off obtaining a loan for the lump sum you need then using your settlement payments to pay it off. In other cases, selling may be the best course of action. A professional with ample education and experience in this field can analyze your needs, wants and financial situation, then counsel you on what they think you should do. The money is yours, so the final decision is yours. However it cannot hurt to obtain the advice of a financial professional.