Structured-Settlement Annuity Companies - How They Work
If you are receiving structured-settlement payments and have looked into cashing it out for a lump-sum payment, you have probably wondered exactly how these structured-settlement annuity companies actually work. How can they afford to give you a large sum of money and simply wait for their profit to come years down the road?
This is a complicated question, but it has a rather simple answer. They are taking on a degree of risk that the payments will not be paid out all the way, but they limit that risk by choosing their investments wisely. If you have a legitimate settlement payment being paid by a stable company that isn't likely to default, then it is likely they will see your payments as a worthy investment and offer you a fair deal.
You may choose to cash-out the full amount owed in your settlement, or to just cash-out a portion of the payments and keep the rest coming to you. Some companies will only cash-out the full amount, but there are some well-established companies who will strike a deal just on a portion. This is advised if you have a substantial amount of money coming to you and only need a portion of it right away. Remember that you are giving up some of the money in the deal, so keeping some of the payments will allow you to receive a greater portion of your money in the long run.
Most legitimate companies will hear the details of your settlement and give you a free quote on cashing-out the payments. They will have buyers available who work with you to iron out an agreement which is acceptable to both sides. In this process, they will be considering the present value of your settlement amount.
"Present value" means what the money is worth in our current economy. Obviously, the value of money changes with time. Since settlements deal with money that is paid out over time, the money will be worth much less in five years when it is actually received by the company. Keep this in mind when reviewing their offers because they must make a profit in the long run or it's a losing deal for them.
After an agreement has been made, you will have to sign a sale agreement. It is advised you have an attorney look this over before signing if you are not familiar with the laws governing these sales. You will then have to go through a court proceeding to get legal permission for the sale. There are laws governing the sale of settlement payments, so this step cannot by bypassed. Any company that does not ask you to do this is likely being deceptive in some way. Payout could take a couple of months since these steps must be followed, so is not an overnight process. In the end you should feel satisfied that your needs were looked out for and fairly met.
To find the structured settlement annuity company that meets your needs, you'll need to take a little time to search through your options. First, you want to find a company that is legitimate. Then you'll need to take those companies and apply for quotes to get information about what they have to offer you for a lump sum payment. Once you've applied for various quotes and information from different companies, choosing a structured settlement annuity company is going to be a matter of personal preference based on the information that you gather. You'll need to decide which company offers the best settlement purchase price and details of the purchase, as based on your needs.
Once you sell your settlement to a structured settlement annuity company, you'll lose all legal ties to your settlement, and be left only with the lump sum that the company gives you. You'll also have to pay taxes on that money, so make sure that you really need to sell your settlement before you make a hasty decision. You need to be fully informed and prepared before you sell your settlement. You also need to take the time to shop around and compare rates from different companies. You might end up finding a better deal than you thought you could if you invest a little more time.
