What to Consider Before Selling Your Annuity

Many Americans are using their capability to reallocate a part of the retirement savings to undertake pressing financial needs that can’t be delayed. Selling part of their payments from an annuity gives you an opportunity that can save you from fiscal troubles.

A vital variable to think about before selling your payments is deciding when and why you need to sell your rights.

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Selling a Structured Settlement

selling structured settlement paymentsStructured settlements are not something that most people are seeking. The thought of receiving an unexpected annuity (a prearranged sum to be paid out annually) in addition to a regular income is certainly compelling. But the fact that you must suffer a serious incident or accident that results in long-term injury or illness in order to qualify for such a settlement makes the prospect far less appealing. And yet, if you have been the victim of such unfortunate circumstances, you definitely want some kind of settlement to ensure that you don’t spend the rest of your life saddled with medical bills that you can’t hope to pay (in addition to your ongoing pain and suffering). Of course, many people hope for a lump sum that they can do with as they wish. But many judges see fit to offer a structured settlement instead as a way to maximize the payout (often by reducing taxation through a deferred payment plan) and protect injured parties from themselves (whether justifiably or not).

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Top Three Reasons to Sell a Structured Settlement

Why does a person receive structured settlement? It usually comes down to 2 reasons, either a personal injury or product liability.

This is a financial and legal agreement between the defendant and the plaintiff which refers to periodic payments aimed to be compensation for the injury. The plaintiff is offered structured settlement once the defendant’s attorney becomes sure of the fact that there’s no winning the lawsuit and it’s in the best interest of the defendant that a mutual settlement is finalized. As a result a huge amount of money is awarded to the plaintiff, which they receive as periodic annuity payments from an insurance agency (at times broker).

Now, the question is what may have induced you to start considering a cash-out. Though there are many advantages of holding on to structured settlements, most of the plaintiffs are selling off their structures in return of an attractive lump sum which makes it easier for them to take care of a number of responsibilities which expenditures and/or investments. Annuity payment from structured settlements may be a huge support for some who need a steady source of income for their lifetime but the lump sum can benefit you in a number of ways as well. Let’s take a look at what some of the most popular reasons to selling a structured settlement are today.

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Selling structured settlement – win some and lose some!

Structured settlements offer a plaintiff the flexibility to decide whether they want to continue with the periodic annuities or they want to go for cash-out. Considering that you need immediate cash and are thus looking to sell your structured settlement, the first question that will definitely come to your mind is this – How much can I get for my structured settlement?

Well, a number of factors will be at play. And, it is a combined effect of all these factors that will decide how much you will be able to get. There are, however, a few things to consider such as:

  • The total value of the settlement
  • Rate of discount at which you will be selling off your structured settlement
  • The number of payments you are yet to receive (that’s considering you have decided to get cash out for a part of the settlement amount)

While in case of annuities you would have received settlements at their pre-tax value amounting to the total amount which was initially decided, in case of cash out you need to be ready to ‘part’ with a ‘part’ of the total settlement amount! The factoring company will buy your structures, not at their original value but at a discounted rate. This is where you lose out.  The cash out process usually takes up to 90 days to be cleared. So, you need to be prepared for that too.

Another scenario may arise while selling your structured settlement. Let’s suppose you have already sold a part of it earlier, so can you sell the remaining portion now? Yes, that’s possible too. This, again, depends on the amount of the settlement amount left. You need to furnish to details of your settlement to the factoring company and see if they agree to the process or not. The factoring companies buy the structure from you at a profit, depending on the rate of interest at which you are required to sell your structures. Finding a factoring company isn’t at all difficult at present, what’s tough though is to find one that delivers according to the assurances. That’s where My Structured Settlement Cash comes in, we make it easy to get the best quote available.