Someone who has a structured settlement and is considering a sale of it may wonder who would want to buy. And why?
The purchase of structured settlements as an investment opportunity is getting more play in the media. It’s new (not really)! It’s different (well, OK)! It gives a great return (correct)! The allure is understandable: for an up-front infusion of cash, an investor can take over an existing stream of payments. Because structured settlement buyers use a discount rate to figure how much they’ll pay, they can control their profits – and rate of return. With discount rates often in the double digits, the return on a structured settlement can easily beat any stock or bond available in today’s markets.
The current recessionary economy has also created a boon for settlement buyers. With the economic downturn, structured settlement annuitants are highly motivated to sell. They need cash to pay medical bills, to survive unemployment, or to hold off foreclosure. The more desperate the seller, the more likely they’ll accept a highly discounted settlement, and take the deal fast.
Another reason investors love structured settlements: security. Most annuities are created when a lawsuit defendant takes a lump sum to an insurance company and purchases it. The insurance company is able to invest that cash and earn enough interest to make the payment stream to the plaintiff. These investments are locked in, and usually protected. As a result, the payment stream is relatively secure. As long as the insurer stays in business, the payment stream is a certainty. The only thing the buyer has to do is sit and wait.
But getting into this business can be tough. Of course, you’ll need access to cash in order to make those initial purchases. You’ll also need a reserve of cash to meet operating expenses while you’re waiting for those first settlement payments to come in. You’ll need help navigating the regulatory environment surrounding the sales of structured settlements. All states have a strict process and timeline for sales, and all of them include a “cooling off” period in which the seller could change his mind. You might invest a lot of time and resources into a purchase, only to have the seller back out at the last minute.
Finally, there are a number of very big players in the market who do a high volume of structured settlement buys. In order to get noticed in a bidding environment like QMAP, you’ll have to make your bid stand out – this may mean taking a lower profit.
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.
Tags: annuity, annuity buyers, Annuity Payments, sell annuity, sell payments, selling annuity, selling payments
