ISettlement

A structured settlement is an agreement under which one gets paid over a specified period of time instead of a single lump sum in exchange for a release of claim or liability. Such liabilities may arise out of personal injury or other forms of claim such as workers’ compensation.

The payments can be made on monthly or yearly basis, or can even be spread over a recipient’s lifetime. More often than not such settlements include an immediate cash payment and are set up as an annuity usually orchestrated by reliable insurance companies.

However, a variety of compelling reasons like medical expenses or financial emergency may force recipients to sell their structured settlement payments because they need immediate cash and are in no position to wait out the terms of their settlement.

And there will be no dearth of buyers if someone is really willing to sell it. Under a protective law signed in January, 2002 by President George W. Bush, a structured settlement deal now requires legal sanction to ensure that the sale of your payments are truly in your best interest.

The deal calls for execution of a Transfer and Assignment Agreement with the seller in which the price and other terms of the contract are fully disclosed. The sale is announced to all interested parties which must be approved by a judge.

Under normal circumstances, it takes about 90 days to complete the entire process. When you want to sell your structured settlement, the purchasing companies will assess your immediate needs and decide whether to buy the whole or a portion of a future payment stream.

They will offer you a number of options to choose from, such as lump sum payoff, partial lump sum payout or restructured payment stream. If you own an annuity policy and are receiving payments on a periodic basis, you are likely to receive immediate cash if you are in urgent need of money.

Buyers will prefer a variable annuity as it helps them beat inflation or opt for a fixed annuity in which the rate of return and income stream is predictable. If you win a lottery and sell it, the buying companies will offer you a lump sum amount in lieu of your long-term payment streams.

As selling your structured settlement is a major financial decision in your life, you must carefully assess all your options before making a final decision.