Saturday, September 20, 2008

How to Cash Out a Structured Settlement

Structured settlements can be a complicated topic and there are lots of "fakers" out there giving garbage advice...

I really believe it pays to do your research, especially if you're looking to cash out on your structured settlement

Let's Start By Making Sure We're Starting On The Same Page

If you have a structured settlement or annuity that means you're receiving periodic (usually monthly) payments until you reach the total amount of your settlement.


Let's say John has an accident at work and is awarded $100,000.00. He might receive this as a structured settlement, comprised of payments that amount to $10k/year.

The structured settlement was introduced in the 1970's mainly because it's much easier and more manageable for insurance companies to pay out periodically instead of all at once.

How To Get A Lump Sum Payment Instead Of Monthly

The only way to get a lump sum from your structured settlement is by selling it.

There are lots of reasons people will sell their structured settlements; the most common is that they need the cash immediately.

Think about it: out of pocket medical expenses might be high after an accident, or you might want to purchase a home but can't get a loan... too many people find out the hard way that you can't borrow money against your structured settlement payments.

Where You Should Go To Cash Out Your Structured Settlement

Many folks will run straight to the "large companies" they hear advertising on TV or radio ads.

Bigger companies might have a "solid branding" and experience behind them but there are also downsides: they usually charge higher fees and they won't give you as much cash as other companies!

Keep in mind: I am not saying you should steer clear of the big companies... I just want to make you aware of your options so you can "shop around" (that's the fun part!) and make the best choice for yourself and your family.

Here are some other options:

* Find a direct buyer. There are lots of people who will buy out your annuities as investments.
Advantage: You can often get a better deal because you're dealing with a private buyer.
Disadvantage: There's lots of paperwork and legalities can be a hassle. (Make sure you have a good lawyer who specializes in settlements!)
* Sell only part of your structured settlement. You can get pretty creative with how you structure your annuity.
Example: You might decide, instead of selling the whole structured settlement, that you would rather receive higher amounts each month.
* Exchange your structured settlement with someone else's. If selling doesn't work or make sense for you, you can find a company or private party that will exchange theirs with yours.

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