Understanding Structured Settlement Companies

When it comes to structured settlements; the arrangements, selling the payments, buying the payments and so on, the whole process can be pretty complicated.  So assuming we  are going to assume you are either the buyer, the seller or the one for whom the settlement is being arranged and let you know what you need to look for, respectively, when it comes to structured settlement companies.  Since there were not any classes in school about structured settlements, the internet is really the only place to get information without having to pay a lawyer.

Structured settlements are arranged for 3 to 5 main reasons; personal injury cases, lottery winnings and inheritance delivery or retirement planning.  While there may be a few different reasons as to why you are arranging the structure, the company you work with must meet some very basic requirements.  Make sure they are licensed by the state, make sure they work with reputable companies to fund the settlements.  Check their history to make sure they don’t have any pending lawsuits against them.

Buying An Income Stream

If you want to purchase structured settlements there is usually only one main reason to do this; secure a passive income stream.  Settlements pay out at intervals that are guaranteed per the agreement.  As each agreement is different you will want to have YOUR lawyer review the payment structure to make sure it is in your best interest.  You can take advantage of someone who is receiving payments over time, who wants the money now because they are poor financial planners and you can come in, take say $200,000 to purchase structured settlements worth well up to $800,000, you just get the money over time while this individual gets a lump sum now.

Seller Beware

If you are the one who wants to sell the structured settlement you will have the most options when it comes to companies who purchase structured settlements.  This is because you are fairly easy to take advantage of.  It is easy for a non-financially-savvy individual say, “I would rather have $10,000 now than $40,000 over 20 years”.  The settlement company makes around 12% after they pay you and take over the annuity.  Then they re-sell the variable annuity payment in a bond at 5%, which nets them 7% on every transaction.  Make sure whoever buys the settlement has the financial ability to do so, never work with 1 person companies.