How to Sell Structured Settlement Payments
Based on recent news about the secondary market for structured settlements, you already know that transfer of your structured settlements to a company that buys them is perfectly legal. But understanding why you are able to sell your future payments for instant cash does not mean that you have to. The reasons that sellers are able to do what they are able to do in this market are not legal, but the profit they are able to realize is. If you are curious about profit and why you may want to consider selling your future payments for cash, here are some things that you may want to know about.
First of all, one thing that many people do not understand about structured settlements is that they are not loans. Although a settlement is indeed a loan, the payment is set up as an annuity. The interest on the annuity typically continues over the course of the life of the settlement, meaning that you will have money coming in for your future expenses even while you are waiting for your payout. In the past, this has been referred to as a discount rate, since you are receiving less than the full face value of the settlement at any given time.
The reason why you can sell structured settlement payments for immediate cash is that the settlement is set up as an annuity with a discount rate. This discount rate is a percentage of the value of the settlement, and it tells us that the insurance company actually pays less than it would like to. However, this percentage is negotiable. When the insurance company sells the settlement to a third party, they get their initial discount rate from the third party, and that is how they come up with the amount they are willing to pay you for your settlement. You can even choose to sell your settlement for cash and then negotiate with the insurance company to have that money included in the terms of a new settlement. However, if the insurance company already has a binding agreement in place with a particular company, they cannot change the rate once they have sold the settlement.
Since you are selling structured settlements for one lump sum payment, the best way to get a good deal is through a company that specializes in these types of transactions. Some of the better settlement factoring companies can purchase these payments for a few hundred dollars each. They can even purchase them from people who are in need of immediate cash. These companies will then give you the lump sum payment in about three to five days. The amount that you receive depends on the company you go to, but you can usually expect about eighty percent of the total payments you were originally owed to be paid to you in a lump sum payment.
The factoring company will also be buying the annuity from you, so you won’t need to sell anything to the company for the purchase. In fact, you might not even need to sell anything at all. If you are satisfied with the lump sum that the Berkshire Hathaway life insurance company receives for your structured settlement annuity, you will agree to sell the payments to them in order to buy yourself a tax-free and fully functional annuity. This company actually buys tax-free or taxable bonds from individuals like you and me, in return for which we pay out regular premiums. We earn interest on the money that we invest, but we never have to pay taxes on it.
You may think that a payment system like this is not the best option for you. After all, you would rather have a monthly, quarterly, or annual income stream that keeps increasing over time instead of just coming in one big lump sum. However, a settlement company can provide you with several different options to make the most of your settlement payments. When we purchase our annuities from a reputable company like Berkshire Hathaway Life Insurance Company, we get peace of mind knowing that we are working with someone who pays close attention to detail and understands the value of our structured payment plans. We’re also assured that our payments will be more secure if we agree to sell our payment rights.