A structured settlement is a defined set of payments granted to the injured person of a lawsuit case comprising of an annuity. These types of annuities are called single premium immediate annuities (SPIA). The payments are negotiated with the attorney that managed the lawsuit and the insurance provider that represented the defendant. Structured settlement payments are paid as monthly, annual or one time payments that are paid out at various intervals. The concept behind a structured settlement is to provide toward the long-term needs of the victim. Now and again, however, the unexpected happens to the annuitant such as the loss of job, loss of partner, hard financial times etc. Quite often these people don't have a bona fide option but to make use of their annuity payments in their structured settlement. Other times individuals simply want to make a large investment such as buying a home but lack the traditional means of coming up with a sufficient down payment that the bank would approve. Federal regulation requires that all the structured settlement transfers be approved in court, generally in the corresponding county where the annuitant lives. I highly recommend reading the following if you're thinking about selling your annuity.
Benefits of Cashing in Your Structured Settlement or Annuity
There may be benefits and drawbacks to assigning your structured settlement. It fundamentally has to do with your financial situation and what you intend on doing with the lump sum of cash you'd get from the annuity exchange. For example, if you have a reasonable paying, stable job and would like to purchase a house for you and your loved ones but can't come up with a down payment, then it may be worth consideration. Right now is a great time to buy real estate as the asking prices are very low. However, the housing market won't stay like this permanently. Perhaps you're in a situation where you've found a great job but don't have a vehicle to get back and forth from work. Trading in some of your structured settlement to buy a car you need to land a good job may be worth it, assuming of course you have no other means of getting transportation. Additional legitimate reasons are eliminating credit card debt, home remodeling, continuing your education and learning, starting up a business (with which you have experience), and health related needs. Naturally you should make an effort to get traditional financing prior to selling your annuity simply because it will usually be less expensive.
Cons of Cashing in Your Structured Settlement or Annuity
Alternatively, if your annuity is your only source of income and you have no other methods to support yourself then assigning your annuity wouldn't be in your best interest. How would you be able to pay for day to day living expenses? How would you be able to continually put food on the table for you and your family? It would not be wise to sell your structured settlement or annuity to go on a vacation, start a business venture without any previous working experience, purchase a vehicle you don't need just because its "awesome", satisfy gambling or drug addictions, or sell it off just because you want to have a hefty lump sum of cash in your pocket. Bear in mind that once you cash in all of or part of your annuity it's gone. You can't simply change your mind after the judge signs the order approving the transfer. You might easily blow through the lump sum of cash in a small amount of time. However, if you have a legitimate reason then be comfortable in your decision to cash in your structured settlement and make sure you find the best quote you can. If you're not exactly sure of what you'd do with the money then you should reconsider. You should check with an attorney and/or financial advisor before selling your structured settlement to make certain you comprehend the terms of the transaction. There are quite a few companies that buy annuities,however, a great deal of them charge high discount rates.
Importance of Working with a Structured Settlement or Annuity Exchange Broker
Structured settlement and annuity exchange brokers can often times find you the best offer for your payments. Of course direct funders don't want you to know that but it's true. Brokers can place the transaction to any of the lenders they do business with and secure low discount rates for their clients which means more money to you, the seller. Brokers are not paid salary, like account managers working for direct funders, therefore they cost nothing for the lender to work with. There are numerous investors interested in purchasing annuities so don't be blinded by the "we've been around for 15 years" hype of some direct funding companies wishing to steer you away from brokers. A few popular fast food chains have been in business for several decades but many people would agree that their products are not the best. There are other choices; look around. Tunnel vision is never good. It is 2010 and there is a great deal of competition in this industry which is good for you the consumer. The bottom line is for you to get the most money you can for your payments, whether it's from a direct funder or a broker.
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