Table of Contents
- What Is a Structured Settlement and Should You Choose One?
- How to cash out a structured settlement?
- 5 Good Reasons to Sell Your Structured Insurance Settlement.
- Top listed Structured Settlement Life Insurance Companies.
- What is a Structured Insurance Settlement?
- Structured Insurance Settlements Are Not For Everybody
- Selling Your Structured Settlement Payments
- Before you even consider selling your settlement
- Structured Insurance Settlement : What You Need To Know?
- How To Convert Your Structured Insurance Settlement To Cash ?
- The Choice Of The Structured Settlement Is Often Helpful
- Treading this road is easier said than done, so better think before jumping
- into this option. there is a legal process involved and a court order required…
- So are you ready to take it and convert your structured insurance
- 5 Good Reasons to Sell Your Structured Insurance Settlement
- What About Your Long Term Future?
- Anyways, some of the more valid reasons, let’s take the top 5, on why you
- would want to sell can be broken down into this simple list:
- Top listed Structured Settlement Life Insurance Companies
- JG Wentworth
- Peachtree Settlement Funding
- Stone Street Capital
What is a Structured Insurance Settlement?
This type of settlement is best illustrated by picturing an actual case scenario. Let’s say for example that you are the plaintiff in an injury claim. If you agree to settle the case for a certain amount of money,
Your lawyer, the defendant, or an independent party consulted in regard to the case may propose to have you receive the award money in a fixed number of installments over an agreed period of time rather than as a lump sum. This type of settlement is what we call structured settlement.
There are several ways that payment is made in a structured settlement. You can agree to either have the settlement paid in annual installments or in a lump sum every few years. One major advantage of agreeing to a structured settlement is that it is classified as special income in your tax returns.
As such, it is legally considered separate from an individual’s gross income and you therefore do not have to pay taxes on it. It is also a good financial cushion and may even be a good way of ensuring that you have somewhere to get your mortgage payments from.
Agreeing to a structured settlement is often the most advisable way to avoid having your settlement funds wasted on non-essentials. It also helps you provide for future financial needs and it is even a good way to protect a person from himself.
Some people are just not good with money and these people are highly likely to go through a huge amount in a very short period of time.to prevent a rapid exhaustion of funds therefore, it may be best to agree to a structured settlement.
Your dependents, especially minors, will also benefit a great deal from a structured settlement as this can be used to pay for their college education or other necessary expenses.
People with special medical needs will also benefit from this system because it helps ensure that they always have cash to look forward to with which they can purchase the necessary medication.
In some instances where the plaintiff has been severely injured, it is best to have the settlement funds administered as a special needs trust rather than given as a lump sum or as installments in a structured settlement.
In these cases it is best that the plaintiff or his authorized representative consult with a qualified financial planner first before agreeing to any form of payment structure.
This is especially true if the plaintiff is receiving medicaid or any other form of medical or financial assistance. By consulting a financial planner you can be sure that the payment structure you are agreeing to is the best possible form of settlement for your specific situation.
Structured Insurance Settlements Are Not For Everybody
There are people who may feel trapped by the payment schedule especially when they want to purchase a new house but are restricted from getting enough funds because their settlement contract restricts them from borrowing against future payments.
If starting a business or buying a house is part of your short-term goals then perhaps it will be better for you to request a lump sum and invest the settlement money yourself.
In fact, if you are wise enough, you may take advantage of certain investments that actually offer greater long-term returns than the usual annuities used in structured agreements.
If you are not very good with investments then you may take advice from a reputable financial planner to make sure that your settlement funds are well taken care of.
Selling Your Structured Settlement Payments
You should also be aware of certain situations that may arise out of your agreement to a structured settlement. Some entities may approach you with offers of buying your settlement or perhaps you are already interested in selling your settlement to get a lump sum buyout.
Before you even consider selling your settlement
you need to review the federal laws that govern structured settlements in your state.a majority of states have laws that restrict plaintiffs from selling structured settlements.
You should also consult the insurance company that processed the settlement because there are insurance companies that discourage the sale of settlements and therefore refuse to assign annuities to third parties.
Bear in mind as well that companies that offer to buy your settlement are not charitable institutions. They intend to profit from the sale so they usually start with a very low offer.
If you do decide to sell, make the best of the transaction by approaching several companies and comparing the terms that each company offers.
Through this process of selection you can be sure to obtain the highest payoff. Be sure as well to do a background check of the companies that you approach in regard to the sale.
Stay clear of fly-by-night operations that may suddenly disappear after obtaining the rights to your settlement annuities without paying the agreed buyout amount. Because of the dangers that a buyout poses, it is always advisable to consult a lawyer before entering into such a transaction.
Structured Insurance Settlement : What You Need To Know?
Finally, if you agree to a structured insurance settlement you should always be on guard for any form of exploitation.
The most common form of exploitation in regard to structured settlements is the excessive commission that some insurance companies charge in setting up the agreement.
So make sure that you double-check the commissions that are being charged to you. the defendant can also trick you by overstating the value of the settlement.
For example, the defendant may initially pay the full amount of the settlement, confident with the knowledge that they will be getting considerable rebates from the annuity company that they used.
To avoid getting trapped in this farce, you should compare the fees and other charges of several insurance companies and you may also include a settlement condition that any rebates to be gained for annuities must be made payable to the plaintiff rather than the defendant.
Plaintiffs’ lawyers have also been known to set up a structured settlement for a client whereby the annuities are purchased by the lawyer’s own insurance business.
In other cases the lawyer recommends a financial planner who sets up the settlement for the client and pays the lawyer a referral fee without telling the client.
Make sure that you know whether your lawyer has any financial interest in the transactions that you agree to and make sure that you know the specifics of these financial interests.
You can also obtain full benefits from a structured insurance settlement by taking into consideration the fact that your life expectancy has been shortened by the injury for which you are claiming compensation.
It may be best to agree to a settlement that specifies a minimum number of payments or an agreement that requires the defendant to pay any remaining balance to the plaintiff’s estate in case of death.
In this way you can make sure that your heirs do not lose the value of the settlement in case an untimely death occurs.
How To Convert Your Structured Insurance Settlement To Cash ?
In the world of insurance, there are some things that you need to keep on mind no matter what happens. One thing that you should pay attention to is the structured insurance settlement.
This is an important arrangement that needs to be understood so that you will not end up at the losing end of the deal. What they call as the insurance settlement is simply a settlement that can be given to you by an insurance company in exchange for any insurance claim.
For example if you have been involved in an accident and you are planning an expensive lawsuit, then the insurance company can create this settlement so that the insurance firm can protect the defendant and the lawsuit can be dropped. This is often the road taken by those who don’t want into a long-winded legal process.
The Choice Of The Structured Settlement Is Often Helpful
For the aggrieved party and the insurer, in writing will agree that the aggrieved party will be paid at a regular basis. In most cases, the firms in question fund the settlement by buying an annuity.
Since there is a regular income stream coming from the firm, most people see the settlements as one of their major sources of income. And the set date of the release of payment is seen by recipients as a time of freedom and a time to breathe easy.
But there are those who don’t have the patience to wait for the next scheduled payouts. And these are the persons who have needs the cash early on for one compelling reason or another.
If there is indeed a compelling reason to have the cash in an instant, then the recipients of structured settlements should know that they have the option to sell the structured annuities for cash.
There is a common misconception that in this kind of arrangement, the recipient has neither claim nor right on the payments. This is not true; you should know that you have on control on an asset.
This asset is known as “the right to receive future payments”. This is an asset that belongs to you and you have the option to sell this one or negotiate this with another party or a buyer willing to purchase the structured settlements.
Treading this road is easier said than done, so better think before jumping
into this option. there is a legal process involved and a court order required…
So are you ready to take it and convert your structured insurance
5 Good Reasons to Sell Your Structured Insurance Settlement
During this tough economic time, many people that have been awarded a judgement or settlement are looking into how they can make ends meet. The temptation is there to use your structured insurance settlement and cash it in. But, is that really the best move?
What About Your Long Term Future?
There are many good reasons to cash in your structured insurance settlement for cash today. Just as there are many good reasons, there are also many bad reasons to cash it in.
Each situation is different, so you really need to weigh your options before making a decision on selling. There are also problems with selling your structured annuity settlement that you should be aware of.
Anyways, some of the more valid reasons, let’s take the top 5, on why you
would want to sell can be broken down into this simple list:
- Life situation – You are receiving monthly payments from an annuity. you have been diagnosed with a terminal disease, or you feel like life is taking you into another direction. this could help fund medical care, purchase a new home or other issues can be addressed. your life situation can change instantly, so finding the right time to act is critical.
- An emergency – An emergency has happened in your life. you might have lost a job or a spouse or have incurred another catastrophic event that requires a large sum of cash. consider on selling a portion of your annuity or structured settlement payments to cover the emergency expense.
- Special event –Awedding is about the only special event that could require selling a portion of your annuity to fund. if money is tight and a wedding is coming up that you need to pay for, this would be a good idea.
- Buy a home or car – Now this isn’t just go out and buy one to have it. if you need, not want, a new car or home, this would be a good idea.
Top listed Structured Settlement Life Insurance Companies
If you’re looking for a buyer of structured settlement payments, then the following information should be really helpful. When you want cash for your structured settlement, you should compare quotes from several different companies.
the four major companies that buy structured settlements are woodbridge investments, jg wentworth, peachtree funding, and stone street capital. before you sign any paperwork, make sure you are dealing with a reputable buyer of structure settlement payments.
Is the largest buyer of structured settlement payments, having purchased over $2 billion in the last 15 years. according to the company website, they have dealt with more than 50,000 customers.
Their emphasis is on the use of technology to increase efficiency and speed up transaction times. Jg wentworth recently opened a subsidiary company that deals exclusively with the purchase of life insurance policies for cash.
Peachtree Settlement Funding
Purchases structured settlement payments with a lump sum cash payment. In fact, they consist of a family of companies that also buy lottery payments, annuity payments, and life insurance policies. The firm also makes personal loans in advance of a pending personal injury settlement.
Stone Street Capital
Was founded in 1989 and is based in bethesda, maryland. they have purchased over $1 billion is future settlement streams. In addition to being a buyer of structured settlement payments, they also purchase lottery winnings, annuities, and winnings from contests and slot machine jackpots.
When your are deciding on a buyer of structured settlement payments, you don’t have to choose one of these four companies. It’s true that these firms have a proven track record of dealing with customers and they have a sound financial foundation.
There are dozens more companies that also purchase settlements and they may be trustworthy as well. But don’t just take a look at their brochure. Before you decide, make sure they have the experience needed to successfully complete your transaction.