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Beneficiaries Sell Settlements to Convert Annuities into a Lump Sum of Cash

In the years past, many individuals that were awarded a payment as a result of a judgment concerning malpractice or accident would receive their money as a lump sum. However, many times the court system allows the defendant to provide a structured settlement annuity that delivers monthly payments instead of a large sum of cash. While it might be the logical solution for many individuals that need monthly income, others sell settlements as a way to generate enough funds to pay their medical bills.

Which Option Is Better?

When a claimant accepts a lump sum, from the corporation or individual that owes them money, they receive the entire amount due in a single payment. This large sum of cash can quickly pay off all medical bills, fees and expenses incurred from the accident, or medical malpractice.

Alternatively, other claimants receive a structured settlement annuity. In lieu of receiving a large amount of cash in a single payment, the lump sum is used instead to purchase a structured settlement annuity that can pay out annually, quarterly, monthly, or other scheduled way. Many times, installments can pay out for many years, and even for the remainder of the claimant’s lifespan.

The Benefits of Both Options

There are significant disadvantages and advantages to receiving a lump sum or a structured settlement annuity. Probably the biggest disadvantage to a lump sum of cash is the ability to spend it unwisely and quickly. The greatest advantage is having enough money to get back on his or her feet.

Providing scheduled payments is the biggest advantage of a structured settlement annuity. However, the payments might not be enough to cover all expenses. In times like these, many beneficiaries choose to sell settlements as a way to generate a lump sum of cash.

Picking the best option should always be based on personal circumstances. Individuals that have made the wrong decision and chose the annuity, can always sell settlements to obtain a lump sum of cash.

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