Timing and circumstances are important aspects in determining when to tap into annuity payments.
If you had an annuity put in place as a result of a lawsuit structured settlement, We Pay More Funding experts to say that selling future structured settlement payments can be a wise decision if it will lead to improving your well-being vs. waiting for future payments.
Unlike individuals who purchased annuity payments as part of a retirement or financial plan and in some cases can access their money early (typically with steep penalties applied) almost all structured settlement recipients are not permitted to withdraw cash early.
However, there are still options to sell structured settlement payments if you need to access the money faster.
How Structured Settlement Payments Work
After settlement cash comes to final terms, the court order will request that finances be placed into a kind of annuity contract, also referred to as a structured settlement. Annuities are an irrevocable stream of payments for insurance firms structured in a way dictated by the settlement.
A structured settlement annuity payment stream can be structured in multiple ways as agreed upon by the parties involved. Annuity settlement options can be structured in many different ways depending on what the involved parties and court view as the most beneficial arrangement for the annuitant.
However, not every settlement is structured in a payment schedule. At times, settlement cash is paid out in lump sums in the settlement agreement.
Is Cashing Out Structured Settlement Payments the Best Option for You?
Before selling any structured settlement payment, be sure to examine your options and determine if you can go without the regular payments. Other options to manage your expenses are:
- Hospital charity care
- Contact creditors
The Amount You Can Receive for Your Structured Settlement
The amount you will get when cashing out a structured settlement payment by way of selling future payments will be less than the amount you would have received had you waited for your payments as scheduled in the annuity.
Companies that buy annuities consider the conditions of the market and the value of cash to determine the amount they may offer in exchange for your structured settlement payment.
No firm will pay the full amount of future payments. This difference in cash amount versus long-term value is regarded as a discount rate.
The longer the annuity terms last, the less you will receive for the lump sum. But, this doesn’t mean you will get a bad deal. All it means is that you have to be keen about the kind of deal you choose.
The Selling Process
Although the quality of the process differs based on the buyer, the steps for selling remain the same regardless of the option you choose. Some of the steps you are likely to take include:
- Choosing a quote
- Getting the court’s approval
- Accessing your funds
In a Nutshell
If you have annuity payments and are looking to sell them, the right structured settlement company will offer you cash now in exchange for your structured settlement payments. The right company’s team will walk you through the entire process and respond to all your questions, to help you make the right decision.