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How Structured Settlements Work

The commercials are tempting, featuring funny people in silly situations promising to get you cash now.  You wonder why you got this structured settlement in the first place.  Why bother?

Structured settlements originated in Canada in the 1970s and grew quickly in popularity.  Why?  There are a few reasons.

First, defendants in a personal injury lawsuit realized they could invest an amount of cash smaller than the actual amount of the settlement, and, through careful and conservative vesting, actually meet the settlement obligation they agreed to in court.  The defendants were free of their settlement obligation without the hassles of administering and paying the funds on a regular basis.

Second, plaintiffs and their attorneys realized that the structured settlement was a great way to ensure a steady stream of income to an injured person.  Because the defendant was no longer involved, and administration of the payment stream had been turned over to an objective third party (an insurance company), the risk of default was lessened significantly.

If you are an annuitant – that is, a person receiving the structured settlement – this whole process may seem unfair to you.  After all, you were awarded a certain amount in a lawsuit, why can’t you have it all now?  Why do you have to wait?  What if you have other things to spend it on?

In truth, the structured settlement guards against all that.  Were you to receive a huge cash settlement up front, it would be difficult to resist the temptation to blow the whole wad at once.  Even if you are the paragon of restraint, chances are some family member or friend or some other “emergency” would present itself, demanding the cash.  A structured settlement protects you from all that.

If you were disabled, and are unable to work, either temporarily or permanently, a structured settlement is designed to ensure that you have cash when you need it and in the amount that you need.  The payment schedule prevents you from spending it frivolously.  The structured settlement, in effect, protects you from yourself.

Of course, you can sell it.  You can sell all or part of your settlement for cash in about 60 days or so, depending on your state.  Just know that you will not get the full amount of your settlement – not even close.  Buyers will cut down the full amount in order to cover their costs and make a profit – and it’s your price to pay for wanting cash quick. It’s an option, but if you can wait, you probably should.

If you need help selling your structured settlement, annuity or lottery payments,
contact us today. We are here to answer your questions and help you obtain the
highest possible price for your payments.

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