Structured settlements are a small percentage of personal injury settlements

A Towers Perrin study* reported that in 2006 $161 billion was paid to injury victims and their attorneys. If one assumes that one third of this amount represents contingency fees, then approximately $105 billion is paid to plaintiffs each year. New structured settlements are created at a rate of approximately $5-6 billion every year. According to Standard & Poors**, in 2004 the cost of all outstanding structured settlements was approximately $80 billion and was expected to grow by $6 billion that year. Also according to Standard & Poors**, as of 2008, there were more than 500,000 structured settlement contracts outstanding in the U.S.

Structured settlement payments offer flexibility for uncertain times and changing circumstances.

The average person does not know much about structured settlement payments. Without an understanding of the benefits of structured settlement payments versus lump sum payouts, most injury victims tend to choose a lump sum payment.

In fact, Joseph M. Costello, Chairperson of the National Structured Settlements Trade Association (NSSTA) Marketing Committee, reported at NSSTAs 2007 Winter Meeting and 2007 Annual Meeting that just 7% of personal injury settlements between $75,000 and $100,000 include structured settlements and only 30% of personal injury settlements above $1 million include structured settlements.

An AIG study*** conducted in 2007 shows that the less a person knows about structured settlements, the less likely he or she will choose a structured settlement. And, more importantly, the opposite holds true: the more a person knows about structured settlements, the more likely he or she will select a structured settlement instead of a cash payment.

In the study, AIG asked people how they would prefer to receive a settlement. With no explanation of the difference between a lump sum payment and a structured settlement annuity, 65% chose a lump sum and 35% chose a structured settlement. But after receiving explanations of the differences between a lump sum and a structured settlement, 73% chose the structured settlement annuity payments and only 27% chose the lump sum payout, a complete switch.

At the end of the survey, AIG concluded that the structured settlement industry needs to educate Americans about structured settlements.

Once they learned about the benefits of structured settlements, plaintiffs said that a primary reason that they would choose a structured settlement annuity is because it provides a reliable income for monthly expenses and guarantees financial independence. What may not be as clear to plaintiffs nowadays are the many options and the flexibility that a structured settlement offers.

Once a person receives the cash from the lump sum payment, he or she cannot simply change his or her mind and switch to a structured settlement payment. However, if an injured person chooses a structured settlement payment, he or she has the option at a later date to sell all or part of the settlement in the secondary market, for immediate cash, while still retaining a portion of the income stream.

Section 5891 of the Internal Revenue Code and the Structured Settlement Protection Acts at the state level give payees the option, with court approval, to transfer structured settlement payments from themselves to factoring companies who buy structured settlement payments. Given the flexibility offered by the buying and selling on the secondary market, structured settlement payments may be a better option for those people who are uncertain about whether to choose a structured settlement or a lump sum payment.

Very few people actually sell structured settlement payments

Out of the total outstanding amount of money currently held in structured settlement annuities more than $80 billion less than $800 million is transferred on the secondary market each year. That means that only about 1% of structured settlement payments are sold each year.

Only about 1% of structured settlements are sold or traded in the marketplace.

Not a lot of people sell their structured settlement annuity payments. In fact, 99% of people do not sell structured settlement payments. Those who do choose to sell structured settlement payments typically do so because their circumstances have changed, and they need the cash for a specific reason (medical procedure, debt reduction, education, etc.). The cash is used as an escape valve, to help people reduce some of lifes pressures so they can deal with a problem or an opportunity.

Life is full of changes: why should a structured settlement be forever?

Most homeowners buy houses using 30-year mortgages only to refinance many years before the end of the mortgage term. Consumers sign up for long term life insurance life insurance policies which are intended to be in force for extended periods of time. But then they stop paying the premium and let their coverage lapse. Why ? Because their lives change, their circumstances change. Maybe they can no longer afford the premiums, or maybe they can get better coverage elsewhere. The point is that, at the outset, the initial long term commitment made perfect sense, and then as life moved on, a change made more sense. Each year between 3.5% and 7% of all life policies are allowed to lapse by the insured person****.

Circumstances change. Lives change. A person who received a structured settlement as compensation for an injury may want to enroll in college or job training and may decide selling structured settlement payments for cash now is the best way to pay for his or her education. Or an annuitant who received a structured settlement as the result of an injury may have the opportunity to buy or renovate a house to better suit his or her way of life. Selling a structured settlement for a lump sum of cash may be a prudent way to cover the down payment on a house, pay off a mortgage, pay off taxes or to pay off credit card debt.

Even the insurance companies who issue structured settlement annuities recognize that there needs to be an escape valve. Most insurance companies include death commutation riders when they create structured settlement annuities. These riders allow an estate to cash out the deceased persons structured settlement annuityusually in order to pay estate taxes. In addition, two large insurance companies, Symetra Life Insurance Company and Allstate Life Insurance Company, recognize the need for an escape valve in other scenarios and will buy structured settlement annuity payments themselves.

Lawsuit awards are a mechanism by which our justice system tries to compensate victims for their damages. Structured settlements are a tool that helps to customize and maximize an award. A future stream of guaranteed payments is of great financial and emotional value for plaintiffs when they are feeling their weakest and most vulnerable, because it provides stability and comfort at the time that it is needed most, at the time of the injury. However, no one has a crystal ball - life changes and circumstances change, whether it is much needed surgery, a new roof on a family home or job re-training to react to new opportunities. And structured settlement payments can be sold for a lump sum of cash to meet these needs. The ability to access a portion of a structured settlement is a benefit that many industry professionals believe adds to the value and benefit of a structured settlement, allowing it to be utilized to the fullest.

In conclusion

As a society, we get divorced, even though we were not supposed to be parted until death; we re-finance 30 year mortgages decades before they come due; we commit to life insurance policies and then stop paying the premiums all in response to changes in our lives. So, it should not come as a surprise to anyone that recipients of structured settlement payments may need to sell structured settlement payments and cash out part of their payments in order to deal with lifes changes, challenges and opportunities.

At the end of the day, if 1% of structured settlement payees sell structured settlement payments in whole or in part, then, for them, the structured settlement is doing what it was set up to do: to provide them with the emotional and financial help when they need it the most. And for the 99% of annuitants who do not sell their structured settlement payments, the structured settlement payments will continue to provide the financial support that was intended at the start.

Have you just been awarded settlement for injuries you sustained whilst at perform? If sure, is the quantity that you get now adequate to spend your health care charges, considering that the rest of the fund will be dispersed around the up coming 20 years? If not, then what can you do about that?

Structured settlement could function good for some folks, but definitely not for these who urgently require a big sum of cash to pay for hospitalization and soaring medical bills. The only choice you have is to offer your structured settlement and receive the volume that you need now. But offering these periodic payments is not a piece of cake. You have to discover a reliable structured settlement business to obtain your settlement./p>

Structured settlement companies both buy or sell structured settlements to give victims a 2nd selection to think about their payments and to provide people claimants who are in need to have with a huge quantity fairly than a long-term monetary safety.

If you want to offer your structured settlement, see to it that you market your payments to a reliable company, given that a transaction of this naturel cannot continue without having the ruling of a decide. Similarly, if you wish to obtain a structured settlement, you must appear for a reliable structured settlement company that you can trust.

Offering and purchasing structured settlements are transactions that you really should assume more than prior to making any selection. If you are thinking of selling or purchasing settlement payments to a structured settlement firm, you have to test initial with multiple organizations in order to get the greatest payoff possible. Also, make sure that the business that buys or sells structured settlement is nicely established and a reputable one particular.

personal injury settlements

Once you first get the structured settlement payment, you can be certain that you will view it as the most perfect plan you ever thought to use. This is mainly because the structured settlement will certainly provide you with the financial comfort you will need for a given time period.

However, seeing as how circumstances are always wont to change, you can be certain that you will sometimes consider selling structured settlements. Sometimes, unexpected expenses will come up. Then, you may find yourself drowning in various debts. This means that your monthly installments will no longer be sufficient. In such a case, you will certainly be in need of that lump sum of cash.

The thing to note about undertaking to sell structured settlement payments is that there will always be a buyer who will have some interest in procuring the structured settlement payments. These buyers would also be very willing to pay hard cash for your structured settlement. Finding buyers is not such a big deal. The main hardship you will get would be to get that buyer who will actually offer you a suitable amount that will quell your needs perfectly.

Of course, undertaking to sell structured settlement payments will come with a loss. Mostly, it will be impossible for you to receive the full payment for your annuity's entire value. This is because even the buyers will be looking to make their own profit.

This is the main reason why you will want to go out of your way to find that buyer who will actually manage to offer you the perfect amount of money for the structured settlement you are putting up on sale.

Quotemeaprice is author of this article on sell structured settlement payments. Find more information about structured settlement.

Sell structured settlement payments--this phrase, by itself, may not mean much to the average person. But put them together into a statement like: -I plan to sell my structured settlement payments--and they create a controversial, emotionally loaded topic.

There are many reasons not to sell structured settlement payments

There are many reasons not to sell structured settlement payments. But there are also many reasons when, give the individual's situation, it makes sense to sell structured a settlement annuity. Here are some common objections to that powerful phrase-sell structured settlement payments-and some circumstances when, even given the validity of the objection, it still can be smart to sell structured settlement payments.

Concern: Person does not want to damage total financial picture by removing a long-term, steady source of income.

Answer: If the annuitant will use the lump sum payment to invest in his or her income-producing future, such as for education or career training expenses or to start a business, it might be a smart decision to tap into the structured settlement. Each of these expenses-education, career training, business startup costs-should lead to a future stream of income that will replace the income lost as a result of the annuitant's decision to sell structured settlement payments,

Also, if the annuitant uses the cash from selling a structured settlement to build, purchase or improve a home, he or she is actually making an investment in his or her way of life, family stability, and emotional state that will ultimately improve his or her long-term, overall future and ability to earn an income. Think about how much better positioned the person will be to pursue and hold a stable career or job when he or she has the peace of mind of owning a home, for example.

Finally, if selling structured settlement payments for cash allows the injured person to avoid foreclosure, pay down a mortgage, or pay off credit card debt, then the loss of long-term payments will likely be offset by the benefit of financial and emotional stability. Imagine how much more confident and focused the person will be in jobs, interviews and any other situation with the knowledge that he or she is debt-free and in good financial condition.

Concern: Might not get the most value for the settlement or might lose value by selling at today's rates rather than future rates.

Answer: First, there are many issues to consider when making a decision to sell structured settlement payments-and not all of the issues are financial. One must also consider the emotional aspects as well. There are times when a financial loss is a small price to pay for reducing or eliminating the emotional stress and anxiety one might feel about being in debt. When one considers the original intent of the structured settlement-to provide financial and emotional peace of mind after an injury or crisis situation-sometimes selling some of the structured settlement payments is just a logical extension of its original purpose.

Second, if the annuitant uses the cash lump sum to pay off a debt with an exorbitant interest rate, finance charges, or late fees, such as credit card debt, even a discounted settlement payment will offset the high rates or fees on the debt. And the peace of mind of no longer being in debt or at risk of bankruptcy or foreclosure may allow the annuitant to move forward with smart plans for the future.

Concern: Does the reason qualify as a good reason to sell structured settlement payments?

Answer: Based on the transactions that have been approved by judges, there are a number of valid reasons for selling structured settlements: paying off or reducing debt (especially caused by a job loss), avoiding bankruptcy or foreclosure, taking care of healthcare and medical needs, paying for education or career training, providing for family, starting a well-planned business, paying for expenses related to a new or existing employment opportunity, or buying or renovating a home.

The list above is not complete of course-people have been approved to sell structured settlement payments to purchase a car to replace one that was constantly in need of expensive repairs, for example-so if the reason is practical and aimed at either reducing an expense or a debt or creating a new source of income or investment, it should be a good reason to sell structured settlement payments in the eyes of the legal system.

Concern: Perhaps the individual should find another source of cash such as a bank loan or home equity line of credit.

Answer: In today's tight financial market, even individuals with good credit may have a hard time getting a bank loan. And people with average or below average credit scores will find it nearly impossible to take out a loan. Besides, even if a bank would give out a loan, is now really the right time to add the unsettling feelings and stresses of increased debt to one's life?

As for a home equity line of credit, these days, when the value of one's home may be less than amount owed on the mortgage, it may not even be possible to get a home equity line of credit. And even if one is able to take out a home equity line of credit, when a person is coming from a place of insecure finances, it is scary and often risky to put one's home on the line as collateral for this type of loan. Besides, it is not the best idea to load one's home up with debt-even if the loan is at a lower rate as is often the case with home equity lines of credit.

Finally, if a person has access to cash from a structured settlement annuity to tie them over until a future source of income or job kicks in, there is a priceless emotional feeling of being free from debt-it is like being given a clean slate or second chance. And that sense of optimism and freedom provides the best frame of mind for the best chance of success when starting the first day of the rest of one's life-which of course is exactly the point of the structured settlement in the first place: to help the annuitant meet his or her needs while recovering from an injury or crisis.

If you are considering selling your structured settlement for instant cash but do not know the right and proper ways to go through the process, then read on and learn the basic steps in selling your settlement funds.

Step 1

You need to make sure that selling your settlement is the most logical option for you. There is stability in keeping your funds the way they are, but if your in need of immediate money it is by far more important than the stability of keeping the annuity, then it is better to sell it.

Step 2

How much are you willing to sell? If your funds are hefty enough do not sell the entire amount, then opt to leave certain amount of your settlement to maintain the periodic payment coming in for a few more years to come. But if the whole amount of your settlement is the answer to your financial dilemma, then sell all of your annuity.

Step 3

Look for various companies and ask for their quotes, it is best to have at least three quotations. It would be best to consult with their agents to know the options, their offers and the terms and conditions of their company. The internet is the best tool for you in searching for these structured settlement companies.

Step 4

Compare the many companies out there, considering on the rates, reputation, after sales services and just about anything you look for in a structured settlement. You need to be wise in your decision, as not all structured settlement companies are the same, so make sure that you discern very well for the best company to buy your annuity for your sake.

Step 5

If the intricacies of the process overwhelm you, then you can consult this situation with your lawyer. He can give you insights on what your expectations will be. He will also be the guide in ensuring to gain the best result out of the procedure that will benefit you.