When you sell structured settlements, it is essential that you understand the possible financial consequences of your decision. Selling a structured settlement requires you to sell an amount of money that has been awarded as a consequence of the injury lawsuit. Sellers usually earn more when they receive regular payments. This is because settlement payments are tax-exempt and are included in the sellers` income statement. However, these payments do not increase the income of sellers immediately.

The decision to sell structured settlements is based on the present value of cash offered for the settlement. To determine the present value, take into account all the expenses involved in buying the settlement. You can then multiply the present value times the total amount of payments to be received. The number of payments to be received will determine the selling price.

One of the main reasons why settlement payments are sold by brokers to insurance companies is to free up business resources. When an insurance company offers a large sum of money to settle a claim, it takes away some of the company’s resources. An insurance company will typically give a broker a small loan at a fixed interest rate, which it expects to be repaid over a certain period of time. Once this loan is paid off, the broker has used the settlement payment as an asset and is able to sell structured settlement payments to another insurance company for a profit.

Insurance companies are interested in buying structured settlements because they are tax exempt. In most cases, these payments cannot be borrowed against and are not readily available for use by other businesses. When an investor decides to purchase the structured settlement payments, it makes sense for him or her to purchase them in bulk amounts. By purchasing a lump sum of payments from an investor, the investor can make a profit on the sale, since the entire lump sum is usually much larger than what he or she could purchase in smaller installments.

The government recently conducted an investigation of several structured settlements sold by New York based factoring companies to third parties. The report found that many of the transactions did not provide a level of quality control or information to buyers. Some of the largest recipients of structured settlements did not have a complete understanding of the total cost, did not receive accurate quotes, or were not provided with information needed to make an informed decision. A factoring firm owned by hedge fund billionaire Paul Singer was one of the subjects of a probe conducted by New York state investigators.

This highlights the need for brokers to have the knowledge, experience, and ability to properly advise their clients of the present value of structured settlements. Brokers need to be thoroughly trained in current and future interest rates, and need to be able to access the most reliable quotes and information possible. If you are interested in selling your settlement payments, contact a broker today.