A lawsuit that's settled out of court is often paid to the claimant in a single lump sum, but sometimes the award is parceled out in an installment plan called a structured settlement. This arrangement is usually formed by liability insurance companies that buy annuities that guarantee regular payments to the plaintiff.
Despite the advantages of arranging a schedule payout (the monies are tax free, and some people don't trust themselves to save the full amount received at once), there are times when recipients regret not taking the lump sum, which in most cases is the more financially sound option in the first place. An emergency medical expense, investment opportunity, or other situation might come their way where they need cash faster than they're receiving it on an annual basis. Since the deal was cemented in legally binding contract, there's no way to undo the decision. But they can sell the settlement.
Settlement purchasers buy structured settlements to make money on the margin between what they pay for them and the full amount of the remaining payments they'll receive long term. For this to be profitable, they need to buy for less than its "retail" value. This isn't always a viable business model, since the federal tax advantages are voided when structures are transferred to third parties, and some insurance companies impose their own restrictions on the these transfers in the initial settlement agreement; so whether you're actually able to sell your structured settlement is something you'll have to research, since regulations vary from state to state.
Despite the advantages of arranging a schedule payout (the monies are tax free, and some people don't trust themselves to save the full amount received at once), there are times when recipients regret not taking the lump sum, which in most cases is the more financially sound option in the first place. An emergency medical expense, investment opportunity, or other situation might come their way where they need cash faster than they're receiving it on an annual basis. Since the deal was cemented in legally binding contract, there's no way to undo the decision. But they can sell the settlement.
Settlement purchasers buy structured settlements to make money on the margin between what they pay for them and the full amount of the remaining payments they'll receive long term. For this to be profitable, they need to buy for less than its "retail" value. This isn't always a viable business model, since the federal tax advantages are voided when structures are transferred to third parties, and some insurance companies impose their own restrictions on the these transfers in the initial settlement agreement; so whether you're actually able to sell your structured settlement is something you'll have to research, since regulations vary from state to state.
This list of 17 Settlement Purchasers is a good place to start your research. Find out more about companies who Purchase Structured Settlements.
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