Selling Structured Settlements
If you have a structured settlement and have wondered about selling structured settlement annuity payments then there are some things you need to be aware of first. A structured settlement is a defined series of payments that is given to an individual who has been injured and has filed a lawsuit case that is made up of an annuity. These kinds of annuities are referred to as single premium immediate annuities (SPIA). These annuity payments will be determined and negotiated with the lawyer who is managing your lawsuit and the insurance company that is representing the defendant in the case.
Structured settlement payments are paid out to you on a monthly basis, an annual basis or as a one time payment. A structured settlement is designed to provide you with monetary compensation over a long-term basis because you have been a victim of an accident and have suffered a serious injury. However what happens sometimes is that the annuitant (recipient of the structured settlement) falls upon hard times financially such as losing a job or going through a divorce. What the person may then decide to do is to use their annuity payments that they obtained in their structured settlement to help them cope with their financial hardship.
In other cases an individuals may consider selling structured settlement annuity payments to make a big investment such as purchasing a home. If you have no other way of coming up with a down payment then this may be the means you decide to use, as long as it is one that your financial institution will approve of. Structured settlement transfers are federally regulated and they must be approved in court in order to go through. Most of the time the court proceeding must take place in the county where the recipient of the structured settlement lives.
Selling structured settlement annuity payments has its share of good points and bad points. One of the most important things to consider is what your situation is and what you plan to do with the money you would get back from the annuity. Some reasons for cashing in and selling your payments make sense and are legitimate while others are not so much. For example, if you have a good job and are earning a decent living but do not have enough money for a down payment on a house then if the price is real estate is low it might be worth your while to sell your annuity payments.
You may decide to sell your payments due to a health related situation, to remodel your home, to clear credit card debt, to go back to school or to start a business. These are all worthwhile reasons to choose to sell your annuity payments. However it is wise to first look for other means of financing these endeavors as selling structured settlement annuity payments can be expensive in some cases.
Should you consider selling your annuity payments
An annuity involves a person paying a lump sum of money to an insurance or annuity company, which in turn pays that person regular payments of a set amount for the rest of life. The individual taking out an annuity retirement plan would earn interest so in addition to being paid back the initial amount invested money is earned in the form of interest. With an annuity, the person would not be able to withdraw money until age 59.5 without being charged a 10% penalty by the IRS.
Now, a person with an annuity might be interested in selling annuity payments, which is a possibility but with this, a tremendous amount of understanding is involved. People can contact any local annuity company or search through thousands of companies online and find all of them offering to purchase payments. However, what people need to know is that when selling annuity payments, they give up some of that money so finding the company that is going to pay the most is critical.
Top financial advisors will tell people that they should never even consider selling annuity payments because of the loss of money. However, sometimes people find themselves in a situation when selling is the only viable option. Therefore, anyone thinking about selling annuity payments should first try to find other possible solutions, leaving this as a last resort but if selling the payments were the only option, then the individual would need to work with a professional insurance or annuity company that would pay the most.
Remember, with an annuity of any type, money is paid out on a scheduled basis in the same amount each month so if someone wanted to take out a large sum of the money or all of the money ahead of schedule, they could be selling annuity payments. With this, the person would receive a significant amount of cash in one payment rather than receive smaller payments until death. Usually, some type of emergency would constitute this decision but other reasons for selling annuity payments includes putting kids through college, a medical crisis, new home purchase, settling an estate, etc.
Annuities are designed as long-term investment opportunities so the goal when buying one is not to sell it but if plans change and the person now needs money, it is possible to sell the payments. Today, more than 30 governments of the United States believe that people with annuities should be able to have access to the money. Pushing for consumer rights, many states now make it possible for payments of annuities to be received if it is determined to be in the person’s best interest.
