What is a Structured Settlement? How Does It Work?
There are still people who are asking, “What is a structured settlement?” The simplest answer to the question is that it is receiving a personal injury settlement over time, instead of a lump sum. It is one of the options that are available to personal injury plaintiffs who have settled or won their cases. The series of payments is what is known as structured settlement. There are several factors that will determine whether you should consider a lump sum or a structured payments.
How Does a Structured Settlement Work?
Now that you know what a one is, the next step is to find out how it works. Instead of getting a large amount right away, you will get a specific amount over a fixed period of time. For instance, if you get a settlement worth $500,000, then your structured settlement payments can be $50,000 each year for ten years.
The structured settlement can be designed to provide the plaintiff money when one needs it the most. Below are some structured settlement options:
Large first payment – if the plaintiff is unemployed for some time due to the personal injury and the bills are piling up, then the structured settlement can be designed to provide a large first payment in order to pay off a mortgage, pay overdue bills, or buy items needed. The succeeding payments will be much smaller and can act as a substitute for the lost income.
Increasing payments over time – plaintiffs can design structured settlements to have increasing payments throughout the year. The payments start very low and end up at a much higher amount.
Decreasing payments over time – the opposite of the example above is when the payments decrease over time. The structured payment starts high and will be reduced over time. This is the option if you expect your income to improve in the near future.
Extra amounts for extraordinary expenses – there are some instances in which plaintiffs opt for structured payments that provide a yearly income, with additional amounts that can be used for other expenses, such as house repairs or college tuition.
Delayed payments – there are plaintiffs who opt to delay the payments of their settlement until they retire.
Structured Settlement as Annuity
By now you already know “what is a structured settlement“. It is important to note that the defendant is often required to buy an annuity from an insurance company in order to pay for the periodic payments. Financial experts state that having an annuity with an insurance company is a more stable alternative compared to depending solely on the financial health of the defendant.
It is important to consult with an attorney that can tell you exactly what is a structured settlement, and the reasons why you should opt for one. The attorney can also help negotiate the terms of the settlement. One can also provide advice on whether to get a structured settlement or just settle for a lump sum.
Things You Need to Know in Case You Want To Sell Your Structured Settlement
The inflation rate has tremendously increment since the day that you started receiving your structured settlement. The value of money has also been significantly diminished. Unfortunately, the amount of your structured settlement remains the same. According to the experts, the downturn of the economy will continue in the next year which may affect individuals that are receiving a monthly payment. People are trying to sell their annuity in hopes of getting a higher lump sum. In case that you want to sell your structured settlement to receive a lump sum that will finance an education, newest business venture or to address a recent change in your life such as medical-related expenses, here are some of the things that you need to know.
Why Should You Sell Your Structured Settlement?
Selling your annuity opens up a whole new chapter of your life. It presents a lot of possibilities; you may enjoy a brighter future and tend to the current problems that you are facing. When you want to sell your structured settlement, you need to have a strong and qualified reason since the presiding judge will determine if selling you annuity is valid or not. Here are some of your reasons.
- Having an Investment- In case you want to invest your money in order to allow it to profit, you may sell your structured settlement. Having a lump sum in your hand allows you to better control it and act immediately when opportunities come your way.
- Marriage-related circumstances- those who are planning to start a new life with their partner or those who are undergoing a divorce need a financial mean to support this journey.
- Debt-On the off chance that you have a significant amount of debt left in the medical facility during your rehabilitation process, a lump sum is an essential source of money that will avoid any financial-related burdens.
- Education-In the event that you need to support your education or someone you love, selling your annuity may be a good choice. When you sell your structured settlement, you or your loved ones will have more options in their career that will exposed them into great opportunities.
- Business-A monthly salary that is coming from your structured settlement is a small amount of money that forbids you from supporting your business or from starting a new venture. If you want to start a new business that will give you a steady source of income, you may want to sell your structured settlement.
- Residential Property-The amount of money that you get yearly from the structured settlement is not enough to save your residential property from foreclosure. The money that you will get when you sell your structured settlement can address different dilemmas surrounding your house. You can even use it to buy a new home.
These are just some of the reasons that you need to know when you want to sell your structured settlement. You need to know that your reason has to be significant and crucial in order to be approved by the presiding judge.
What You Need to Sell Structured Settlement
There are several reasons why you need to sell structured settlement. A lot of people do so to stay afloat when faced with financial problems. However, there are some people who are unaware of what it is. Others don’t even know that they can sell their structured settlement.
A structured settlement is a financial tool made for people suffering from injuries. An individual can opt for a structured settlement as an alternative to receiving a lump sum payment as part of a personal injury settlement. Payments of a structured settlement are made over a period of time that matches the needs and goals of the individual.
While you are guaranteed to receive payments from the annuities bought to fund the structured settlement, there are instances in which your financial situation might change over time. And when that time comes, you might want to sell structured settlement.
How to Sell Structured Settlement
The process of selling your structure settlement is relatively easy. It involves deciding how much to sell before going to a judge to approve the request. Making the decision to sell structured settlement is the first step of the process. You should have valid reasons why you need to sell it. And the sale should not have any effects on your financial needs in the future.
The next step is to look around for a funding company that provides the best rates. It is important for the company to have your best interests in mind. The company must also be reputable and uses its own money to purchase your structured settlement. It is also important to determine whether the company is experienced in processing the transfer in accordance with the court order.
The company you choose to sell structured settlement to must be one that you like. Start the process by submitting the required documents that include the policy, settlement agreement, and the benefit’s letter. This will allow the transfer company to verify the application and payments. The documents are reviewed to make sure they are accurate and complete.
Once the documents are reviewed, you should employ the services of a local attorney to file them with the court. Then wait for the court to schedule a hearing. This will start the waiting period. The judge needs to know whether you need the money or not. If there are no issues with the request, then the judge will approve the transfer. Once it is approved, the order will be sent to the insurance company to send you the money.
As you can see, it is easy to sell structure settlement as long as the documents are in order, and your reasons are accepted by the court. It is recommended to consult a settlement broker to find out how much you can get from the sale.