The point of a structured settlement is to provide you a source of future income to take care of you, so if you’re thinking of cashing it out, you really should weigh the decision heavily. When you think of why you want to sell, if your reasons don’t match the ones listed below, you should consider alternatives.
A True Financial Emergency. This should be a genuine, virtually life-or-death financial emergency that can’t be resolved any way else. Life-or-death medical care is an emergency. Buying a new wardrobe or going on a vacation is not, no matter how tattered your current trousseau, or how stressed out you are. Fixing a broken down car might be an emergency, but can you fund the repairs some other way? If there’s another way to solve the problem, cashing out your structured settlement is NOT your best option.
A Problem Settled for Good. So, you have some expenses you want to pay, perhaps some high-interest credit cards. The interest savings on the plastic might make cashing out your structured settlement worth your while, but will the proceeds from your settlement pay them off completely? Even if so, do you have some other way to meet your living expenses so that you won’t max out your credit cards again? If your answer to those questions was “no,” selling your structured settlement is NOT an option. Instead, you need credit counseling and help with your budget so that you can stop living beyond your means.
A Guaranteed Investment. Your structured settlement is being invested by pros, usually employed by the insurance company administering your settlement payments. You may have heard people tell you that you can do a better job and get a better return. Sorry, but they’re wrong. Unless you’re an investment expert, you probably can’t. And if you’re looking at a “guaranteed” investment that will pay a higher interest rate, there should be alarm bells going off in your head. In today’s low-interest environment, high-return investments are likely quite risky. Even if the percentage you’ll earn is better than what the insurance company is using, remember that when you sell your structured settlement it will be heavily discounted. Your fabulous new investment will have to overcome that discount rate, which will likely be in the double digits.
Your structured settlement was meant to protect you, not to be a cash register. Your reason to sell needs to be incredible for the sale to be worth it. Be brutally honest with yourself about why you want to sell.
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.
