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Why You Shouldn’t Sell Your Structured Settlement

Those late-night ads are so tempting.  Who wouldn’t want to trade in a stream of payments that you’ll have to wait years to get for a big wad of cash now?  Well, not so fast.  Here’s a list of reasons why you shouldn’t sell.

Reliable Income.  One reason why structured settlements are such a popular way to settle personal injury lawsuits is because they provide a steady stream of income to the plaintiff.  If an injury has left you unable to work, either temporarily or permanently, you are going to need that income to cover your living and medical expenses.  Insurance companies administer structured settlements, and they do so by investing the lawsuit proceeds into conservative, safe investments intended to provide the income you will need over time.  This reliability is also what makes structured settlements so desirable to factoring companies, who know they can buy your stream of payments and there is virtually no risk that the payments won’t eventually come in.  Can you truly afford to trade in that stream of income?  How will you support yourself, especially if you can’t work?  How will you cover your medical bills?  As annoying as it might seem that you have to “wait” months or even years for your settlement, the idea is meant to protect you.  A structured settlement is in your best interest.

Discount Rate.  If you’ve already looked into the structured settlement process, or even sought offers for the stream of payments you want to sell, you were probably shocked to see how small the offers were.  This is the discount rate in action.  Structured settlement factoring companies – the folks buying your settlement – are in business to make a profit.  They use a discount rate to roll back the total amount of your payments to an amount they’re willing to pay.  This discount rate covers their expenses and also ensures they’ll get a fat rate of return.  Discount rates are often in the double digits.  Would you pay that kind of interest on a debt?  If you wouldn’t, why would you accept that kind of a discount on your structured settlement?

Temptation.  You’re going to give up guaranteed future income for a lump sum of cash now.  What do you plan to do with that money?  Do you think you can invest it better than the pros at the insurance company?  (You probably can’t.)  Are you going to invest in a business?  (What if that business fails?)  Do you honestly believe that you can resist the temptation to spend a giant sum of money sitting in your bank account? (Most people don’t have that kind of discipline.)  Even if you do, as soon as those funds are in your hands, your family is sure to come up with “reasons” why they need some of it.  A structured settlement is built-in discipline, and you will be grateful for it in the long run.

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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