Structured settlements are payments that come about as a result of a court case. That court case may deal with personal injury, wrongful death, product liability, or worker's compensation claims. Payments are dispersed to the injured party as annuities, which are periodic payments. The main benefit of accepting structured settlements is to avoid the costs of a trial.
Pros of a structured settlement:
Settlement payments dealing with personal injury are tax-free.
Offer flexible premium so that the size of payments and payment period can be altered by payee.
Guaranteed payments ensure that the payouts continue till they are finished, even if they must go to a beneficiary after the death of the holder
Guaranteed Income Security ensures that insurance companies continue to disperse payments to annuitants no matter the economic climate.
Holders (beneficiaries) experience liquidity, quick access to funds as long as they are not withdrawing large amounts.
Cons of a structured settlement:
You cannot receive a lump-sum payment whether for large purchases or emergencies. You can only receive small periodic payments.
Selling off your structured settlement in one lump sum, while providing you immediate access to a large amount of money, will lose you money due to taxes and buyer price.
You have to watch out for hidden fees.
If the courts determine that your expected life span (rated age) is low, you may receive fewer payments.
How did Structured Settlements come about?
The first structured settlements, victim payments that the victim receives in periodic intervals for the rest of his life, were used in Canada in the 1960's. In 1982, the U.S. sought to regulate structured settlements by introducing the Periodic Payment Settlement Act (PPSA). It provides tax benefits. Then, in 1997, Congress passed the Structured Settlement Protection Act (SSPA) which kept a watch on the brokers. Now, people can file various torts, such as Worker's Compensation Claims and Wrongful Death Claims, knowing that their structured settlement will not be sucked dry by an intermediary.
In 1983, the American-made National Structured Settlement Trade Association (NSSTA) stepped into the annuity industry to provide an additional safety net for people involved in annuities. Members of the association are safe choices for clients looking for reputable annuity companies.
Why should I sell my Structured Settlement?
To make a large investment, such as college or new business, you may have to sell something. The same goes with crippling medical bills you may incur. Your asset-backed security, (annuity) is likely the place where you can access the most funding. With the help of a lawyer, holders will determine if selling really is in their best interests.
How do I sell my Structured Settlement?
You will enter the secondary market, where annuities are sold. The company you choose will then provide you with a stack of paperwork. To ensure that people are selling their structured settlements for legitimate, legal purposes, annuitants will be expected to submit an explanation of their reasoning to the courts. Once your request is granted, you sell your annuity.
Who will buy my Structured Settlement?
The factoring company who buys your single premium annuity will only do so at a discount. Nevertheless, you will still be receiving a large amount of money. To investigate the matter of potential annuity buyers, you can contact your insurer for further information. Also contact the NSSTA, which has the resources, contacts, and lists of accredited companies that you need to research.