More and more people are choosing to sell structured settlement payment rather than receive their monthly annuities. Why? Because money today is always worth more than money tomorrow, and some people like the certainty that comes with getting a lump sum of cash in hand.
What is a structured settlement? Essentially it is an agreement reached between an injury claimant and a defendant whereby the injured party is paid a certain amount of money every month for a certain period of time. It is referred to as an annuity, and this money is not subject to federal or state tax. It is usually advantageous to both parties, as the victim receives money every month to cover payments such as medical bills, rehabilitation, in-home care, etc. and the payor is able to settle the case and spread payments over a period of months or years to soften the blow.
However, for many people selling structured settlement notes makes sense. They might be at retirement age, need to make a big purchase or stumble upon an amazing investment opportunity. As such, a lump sum would be much more useful to them rather than small payments coming in every month. Even though the lump sum would be less than the total settlement amount, investing that money in even at a moderate rate of return could yield many times the initial amount.
That’s why selling structured settlements is appealing. Also, you don’t have to sell the entire note, you could sell a portion of it, called a partial, and retain the rest of the payments for yourself. That way you get a lump sum of cash for whatever you need it for and the residual income of the remaining annuity. There are other ways to arrange it as well and a qualified note buyer can spell out all of your options.
What will you get when you sell structured settlement payment?
Well that depends on a variety of factors that the note buyer takes into account when assessing your annuity. Some of these include the outstanding balance, inflation concerns, time span and financial strength of the payor. Remember, it has to make sense financially for the notebuyer as well. He or she is assuming your risk when you sell structured settlement payment to them…the payor can always default, inflation could decrease its worth, market conditions can take a turn for the worse. You never know what can happen.
As such, a lump sum today, even though it is less than the total amount of the structured settlement, is a guaranteed payment which essentially removes all of your risk exposure…that peace of mind you really can’t put a price on!
So if you would rather have money in hand than a promissory note, you might want to sell structured settlement payment today and take advantage of a large lump sum of cash. Just make sure you find a qualified, reputable note buyer who can offer you the most when you’re selling structured settlement annuities.
Jamie has been working in the finance industry for many years and is a contributing editor to http://www.selling-your-note.com. Learn about selling structured settlement and receive a free, no obligation quote from professional note buyers.