Structured Settlement Foundation
Because of the number of structured settlements assigned each year, the secondary market has grown to allow the owners of these settlements to manage them according to their financial needs. This option, although potentially beneficial for people experiencing short-term financial problems, should be regarded as the last resort.
Types of Structured Settlements
A structured settlement is usually a method of compensation paid to a plaintiff who has earned a large sum of money from civil suits or insurance claims. To fund such obligations, the party responsible for paying such claims generally uses one of two common methods:
� Buy-and-hold method: Parties buy annuities from life insurance companies.
� The method assigned: The settlement liability is assigned to a third party, which in turn buys the annuity.
Are Structured Settlements Right for You?
Structured settlements are a proven method for solving the financial problems of many personal injury claimants and other beneficiaries of large money claims. Above and beyond the tax and security benefits of receiving periodic annuity payments, a structured settlement is beneficial for people who do not want the burden of investing their results or who have limited competence to do so.
Structured settlements may be suitable for people who:
� temporarily or prematurely disabled
� have limited financial expertise
� are minors or cannot handle their own financial affairs
� requires savings for housing, education or other major future obligations
� has been injured or has ongoing medical expenses
Settlement Market
The need for people to change future payments into cash flows has led to a secondary market for this revenue stream. Companies that deal specifically with helping beneficiaries in changing their structured settlements become more common. However, the cost of redistribution of funds can be expensive.
Those who have received annuity payments are well aware of unsolicited proposals from individuals and companies hoping to capitalize on mismanaged mismanagement. Increasingly unscrupulous these companies have neglected future 40% annuity payments, locking back adjusted for substantial risk. Because of this situation, about two-thirds of US states have imposed restrictions on tax-free, structured settlements.
In addition, some insurance companies will not provide or transfer annuities to third parties to prevent the sale of structured settlements.
Some institutions will permit the sale of some future payments. The majority of structured settlement sales are structured in this way, where beneficiaries only sell the minimum portion of payments required to meet the most pressing conditions.
If you are considering selling all or part of a structured settlement, then the reputation of the company that provides the payment. Do not get involved with a company that may become bankrupt before paying your purchased money. Also, with a lawyer and tax advisor before making any transaction. Approaching potential buyers through structured settlement brokers who can compare and differentiate different offers for you and have the resources to provide legal guidance and transactions.
Other things to consider
- Commissions and fees needed to prepare the settlement can be significant and can take a large number of principals.
- Beneficiaries should ensure that they understand the benefits of lump-sum rewards versus annuities.
- Conflicts of interest can be avoided by confirming that there is no relationship between lawyers and annuity firms - lawyers can often receive monetary compensation to choose a specific annuity firm.
- Plaintiff's life expectancy should be considered when setting the payment options.
- Diversification of the amount to be paid, among various insurance companies, can protect you from bankruptcy to some extent.