Sometimes life throws surprises your way, like unexpected expenses. At other times, there are opportunities or plans where your current financial situation doesn’t accommodate.
For those that own a structured settlement annuity, there is the possibility of selling some or all of their annuity in order to get access to cash in a lump sum rather than scheduled payments to take care of current circumstances. It’s all about meeting current financial needs.
There’s a variety of reasons that people consider selling structured settlement payments, from starting a new business or a home down payment to tuition or medical expenses.
The purpose of a structured settlement is to provide scheduled payments as a form of compensation for a personal injury that might have been sustained. If you were the plaintiff (or assignee) in a settlement, being a recipient of such periodic payments creates an income stream that’s now available in most states and the terms are locked in.
When it comes to cashing in on a structured settlement as a lump sum versus a scheduled payment, it’s important to understand that as a seller you would not get what looks to be face value. People often look at the total investment, but what they should be considering is known as Net Present Value (NPV). When a structured settlement is set up, its a series of future payments that works in a way that’s similar to an amortizing mortgage.
But before you believe you can cash in, you should know that your case needs to be presented before a judge to determine the validity of your request. Numerous factors are taken into consideration, from you current financial situation to what the intended use for selling your structured settlement. If you were injured an unable to work, you could be denied the opportunity to sell as its purpose was to create an income stream to assist with finances as a form of compensation.
There’s also the fact that if you were looking to sell your settlement because you wanted a new entertainment system and a few other items that it might be thrown out as well.
Annuities are a popular way to ensure an income, and many have become interested in purchasing them as an investment. The return is better than most savings accounts and as an investment they’re a secure means to putting money aside for the future, and the market has grown significantly in recent years.