Structured Settlements – A quick guide
To put it simply, a structured settlement is basically when an insurance company makes payments in instalments to those who have made an injury claim, or surviving family members after a loved one has passed away. The above examples are just two of many where a structured settlement could be used. The great thing about the process of a structured settlement is that there are a variety of benefits for everyone involved, which is why these kinds of settlements have become so popular.
To put it simply, a structured settlement is simply a financial agreement in which payments are made in regular instalments. It may sound like a complicated process, but a structured settlement is simply an agreement which is suited to all of those involved. Some policies will differ and offer immediate payment if certain events occur.
The good points of a structured settlement.
A structured settlement annuity provides a payment stream that is tax-free over a determined period of time. Another plus point is the flexibility that a structured settlement offers, as this cannot be achieved elsewhere.
If the payee chooses that they would like the money to be paid over the course of their lifetime then they can do so, which is another advantage. During the course of the settlement, in the event of the recipients death, a part of the settlement may be paid to a beneficiary or the recipient’s estate.
Alternatives to Structured Settlements.
It’s quite simple to see that a structured settlement can work to the advantage of all parties in a variety of circumstances. However, a lot of people would rather not have instalments paid to them, but rather a lump sum payment. This often happens when the individual would like to make an expensive purchase or if they want to pay off outstanding debts.
This is especially true of lottery winners. There are a variety of companies who will do this at a cost. When this happens, there is a charge for interest and expenses. Of course, it is very important that you keep in mind that these fees will be deducted.
How do the alternatives work?
To get the cash in a lump sum the settlement is sold to another company who then takes the instalments and pays the lump sum. A lot of the time the settlement will be bought by another big insurance company.
The insurance company charges a handling fee which will usually be calculated to take into account adjustments for interest charges and handling costs. It is important to remember that these companies will not do anything for free.
Of course, it is very important that you read all terms and conditions that you are presented with. It is a good idea to ask as many questions as you can. It is also an excellent thought to cast a wide net when looking for an alternative to structured settlements as fees and services; and thus your bottom line can vary greatly.
If you are interested in selling structured settlement you can get information and advice from Symphony Investments.
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