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

Structured settlements are used to compensate individuals who have been awarded a large sum of money. They are most commonly used when an individual has been seriously injured or disabled due to the negligence of another individual or organization. They are also frequently used to pay jackpot lottery winnings.

Instead of paying a lump sum of cash, structured settlements are paid out over a period of time. Payments can be issued monthly, quarterly, semi-annually or annually. These payments are backed by an annuity distributed through life insurance companies. Structured settlement payments are tax-free.

There are many types of structured settlements. Each is designed to suit the individual's financial requirements. Some are paid for a specific period of time, while others are paid for the remainder of the recipient's life.

When structured settlements are paid over a period of time, it is referred to as "Designated Period" or "Period Certain Annuities". What this means is the recipient will receive a set amount of money at a specific time (monthly, annually) for a predetermined number of years. If the recipient dies before the structured settlement is paid in full, the remainder will be distributed to the designated beneficiary.

Life annuity structured settlements are paid to the recipient for the remainder of their lifetime. It's important to note in many cases "life" may actually refer to a certain number of years based on the individual's life expectancy. Also referred to as "Period Certain", this type of structured settlement annuity will transfer to the beneficiary if the recipient passes away prior to the designated number of years.

Lump sum annuities provide a lump sum payment at a future date. This type of structured settlement is enticing to people who have children. The funds can be arranged to pay out when the child enters college and helps to pay for educational expenses. Two types of lump sum annuities are available -- "Lump Sum" and "Life Contingent Lump Sum." The first allows transfer of the annuity to a designated beneficiary, while the second does not.

Life annuities provide monthly structured settlement payments for life. Two types of life annuities are available -- "Life Only" and "Joint and Survivor." The first offers no provision to assign a beneficiary, whereas the second continues payments to the beneficiary for the remainder of their life.

Last, but least, is the Temporary Life Annuity. This type of structured settlement pays regular payments for a specific number of years. The annuity ends when the recipient dies, as there is no beneficiary provision.

While structured settlements provide long-term financial security, there are a few drawbacks. The main drawback is once the papers are signed, there is no way to change them. If unexpected expenses occur, money cannot be withdrawn from the account.

Drafting structured settlements is a complex process which requires the skills of an attorney who is well-versed in this area of law. Careful consideration must be taken into account when drafting these complex documents. When structured settlements are properly drafted they can provide the recipient with necessary funding and peace of mind.

These days many settlements are made in the structured format. In case you have been injured in a road accident, you might need money from your settlement immediately to pay your medical bills, and would rather have it now than wait for a large sum of money that may come to you later.

You should carefully weigh the advantages and disadvantages before opting for a structured settlement. If you need money because you have recurring medical expenses on account of your injury or require prolonged physical therapy in order to recuperate, then a structured settlement might be appropriate.

The payment in case of a structured settlement is usually made from interest accruing on a purchased annuity. A structured settlement is binding so once the agreement has been signed, you cannot change your mind about it. If you wish to modify the agreement later because of some unforeseen expenses, you need to go to an attorney to change the terms of your agreement. You cannot use your structured settlement to obtain a new loan either.

Some companies will purchase the rights to your structured settlement for a lump sum of cash, and they will usually do it for the investment potential. What they will pay will be the current day value of your settlement amount, but but not including the invested sum. Rules do vary in different states regarding structured settlements. The amount received from structured settlements is taxable in some states.

If you are going to see an attorney to assist you in negotiating a structured settlement, it's very important that you consider your situation and requirements carefully. Some things worth considering before you make a decision are:

What are the good and bad side of the program? Is the lawyer experienced enough in negotiating structured settlements? Given your own unique situation, is a structured settlement the most suitable or is it getting a lump sum of money? Will there be any tax benefit if you decide to go for a structured settlement? Will the money you need be adequate and on time to cover all your expenses? What about in case of future contingencies, and increased money requirements? Can you change the terms of the structured settlement later? Is it possible to change the program and opt for a lump sum payment at a later date?

Don't forget to prepare a list of specific questions before you speak to a lawyer. Meeting with the lawyer will help you deicde whether he/she is the right person to handle the negotiation of your structured settlement. You should have no doubt in your mind that your lawyer has your best interest at heart, and if you do have doubts, get a second opinion or consult with your own financial planner.

With all your questions completely answered, you are now ready to make an informed decision. Remember that this is a very critical decision to make, as it will affect your future and the future of your family. So be sure to enter into an agreement only if you are completely certain that you have made the right decision.