Get Quotes From Factoring Companies Before You Sell Structured Settlement Payments
Based on recent news about the secondary structured settlement markets, you already know that transferring your future annuity payments from your existing structured settlement to a buyer is perfectly legal. But knowing that you can sell your future payments to someone you do not even know does not mean that you have to. There are some very important questions you must ask yourself before you move forward with any of this. Questions such as:
What are the pros and cons associated with selling structured settlement payments? What are the potential pitfalls? What are the qualifications for obtaining cash from factoring companies? What are the fees that will need to be paid up front?
One of the most important considerations when considering the purchase of structured settlements by a third party is what is known as a discount rate. Simply put, this is the percentage that factoring companies and other buyers pay for each account. In short, it is the rate at which you sell structured settlement payments rights. While the discount rate is critical, it is far from the only consideration that should be made.
For instance, when you consider selling your future payments, there are many factors that go into determining the present value of the settlement payments that you have. These factors include: the amount of time the payments will take to begin making a return on investment, the longevity of the payments themselves, and the level of inflation that may affect the value of the payments themselves. Another important factor that may affect your present value is the creditworthiness of the buying company that is interested in acquiring your annuity or payment stream. How well does the buying company’s credit profile reflect positively on the company and its ability to pay you back? All these factors and more will all play a role in determining the current value of the payments that you are interested in selling.
However, there is another important consideration that goes far beyond the factors that will impact your present value; the effect that selling your annuity will have on your entire life insurance policy. In fact, many insurance companies actually prefer to receive structured settlement payments rather than immediate monthly payments from their policy holders. In fact, some life insurance companies actually penalize policy holders for selling their payments to another company for immediate cash. This is because they view this practice as an attempt to “steal” money right out of their policy holders’ paychecks.
In short, you must get quotes from factoring companies before you attempt to sell your future annuity. You also need to know what the current market values of your structured settlements are. Then, once you get those quotes, you must compare those quotes with the current market value of your own annuity. If the price difference is too insignificant to make a difference in your total annuity payment, then you are wasting your time. However, if the price difference makes a significant difference in your payment amount, then it may be a good idea to work with a structured settlement purchasing company to sell your annuity payments.