A structured settlement is an agreement in which an insurance company agrees to pay an injured party a predetermined amount of money for a fixed length of time. A fixed sum payable at specified intervals is known as an annuity.

Payments in a structured settlement annuity can be made for the duration of a claimant's life. Structured settlement payments may be in equal installments, installments of varying amounts, or lump sums. Structured settlement annuity is income-tax free and guaranteed by contract.

Selling structured settlements allows you to exchange installment payments for a lump sum of cash. There are various legal financing companies who specialize in selling structured settlements; they will pay part or your entire structured settlement annuity in exchange for a lump sum of cash.

The cash value will be less than what you would receive in long term installments. However, the advantage of selling structured settlements are that you can get immediate money to put directly toward other goals, such as purchasing a home, covering college fees, starting a new business, or paying off debts. You can also invest the money and collect interest on it now.

Sometimes people consider selling structured settlements when there are unexpected expenses, such as a sudden illness or divorce. Whatever the reason, having a structured settlement annuity gives you the power to decide how you would like to receive your money.

When selling structured settlements, it is your choice when and how to do so. You should select a time that is in your best interest. A settlement annuity in steady payments may provide you with financial security so selling structured settlements should not be considered lightly.

The insurance companies who pay annuities are not necessarily in favor of people selling structured settlements. It is in their best interest to pay as little as possible to let the rest of the annuity make interest that they keep for profit. Therefore, getting lump sums of cash from a structured settlement gives you the opportunity to invest and gain interest on the money instead of the insurance company.

A settlement annuity is a legal way for you to tap into your own cash flow to help you meet your financial obligations or goals. Carefully researching legal financing companies that can make this process smooth, easy, and efficient is important. The decision of when and how selling structured settlements will fit your best interest is then completely up to you.

About Author: Cash Flow Investment Partners (CFIP) brings you the best of structured settlements, annuities, lump sum settlements and much more. Potential customers fill out a simple evaluation form and we do all the paperwork required to get them cash for their annuity, a lump sum pension payment, or a lump sum payout in exchange for lottery payments. For more information, visit www.lumpsum-settlement.com

Understanding Structured Settlement Fixed Annuity Payment Plans

A structured settlement refers to monetary compensation that is paid over an extended period of time. Annuitants receive annuity payments at regular intervals until the allocated funds are fully distributed. The most common use of structured settlements is to compensate individuals who have been injured due to the negligence of another.

Structured settlement annuities are also used to pay lottery jackpot winners. Annuitants typically receive a lump sum cash payment on a quarterly or annual basis. Entering into this type of payment arrangement allows lottery winners to receive the full amount of winnings, less taxes. Lottery winners who accept a one-time cash payment generally receive around 50-percent of the total winnings.

Annuity payment plans are established by a structured settlement company. Several factors are considered when annuities are used to compensate for injuries. When Annuitants sustain injuries that require on-going care or if they can no longer work, the settlement amount includes adequate funds to pay for medical care and lost wages.

In most cases, settlements provide Annuitants a lump sum payment to cover litigation expenses and required medical treatment, than periodic payments follow. Annuities might be paid for 5 to 20 years, or continue for the remainder of the Annuitant's life. Annuity payments provided to injured persons are tax-exempt, while annuities provided to lottery winners may be subjected to state and federal taxes.

Annuity payments are intended to provide sufficient funds for Annuitant's to obtain the care they require and continue with the lifestyle they had prior to injury. For example, if the Annuitant is unable to return to work, annuities can be structured to include funds for rent or mortgage payments, utilities, insurance, clothing, food, and healthcare expenses.

Oftentimes, structured settlements are offered when the defendant prefers an out-of-court settlement. When litigation costs are reduced there is a possibility the plaintiff's payout will be higher. Legal expenses can consume upwards of 50-percent of available funds, so out-of-court settlements can be particularly beneficial to plaintiffs.

It is nearly impossible to modify structured settlement agreements once they are in place. Therefore, it is crucial that the plan is exactly the way it should be before signing contracts. If a structured settlement is modified, there is the potential the tax classification will be altered which can result in the Annuitant being charged with income tax. If annuity payments are made to an estate, they may be subject to estate tax. It is best to consult with a tax attorney prior to signing a structured settlement agreement.

There are instances where Annuitants sell their structured settlement in exchange for lump sum cash. In most cases, only those receiving annuity payments for lottery winnings can sell their settlement. Not all states allow the sale of annuities regardless of their use. States which do allow the sale of future annuities require Annuitants to obtain court authorization.

It is important to understand the advantages and disadvantages of structured settlements before entering into an agreement. Most personal injury lawyers are familiar with this type of payment arrangement and can guide clients in the right direction.