If you have ever been injured in an accident, you know that there are all kinds of legal hoops to jump through. Not only will you be dealing with numerous insurance companies, but you may also be dealing with several lawyers as well. In the end, you will likely receive some sort of compensation from at least one insurance company. Many times, this monetary compensation will come in the form of a lump sum payout. However, there are times when an insurance company elects to pay you using a structured settlement annuity.
What is a Structured Settlement Annuity?
A structured settlement annuity is one type of insurance settlement. Instead of paying the settlement out as a lump sum payment, the insurance company designs a contract where the damages for your personal injury are paid out over a stated period of time. This benefit is payable to you or to a beneficiary in the case of your death.
While some would argue that it is beneficial to have the payments spaced out over a period of time, others may wish to have the money from their damages all at once. There are any number of things that people can do with a large windfall of money. They can use it to pay off any outstanding debts. They can save it. They can even invest the damages to make money off of their money.
Selling a Structured Settlement Annuity
“I believe that I could receive a larger return if I was able to collect all of my damages upfront and invest them. Is there any way that I can sell my structured settlement?”
Indeed you can. There are several companies that buy structured settlements. They will give you cash upfront for your settlement so that you have the cash in hand. From there, you can decide how you wish to spend, save, or invest your own money.
Advantages of Selling Structured Settlement Annuities
There are a few advantages to selling a structured settlement annuity. As with the payments from a structured settlement itself, the sale of a structured settlement should not result in any tax obligation. Furthermore, you have more control over your own settlement money. Rather than continue to let interest accrue over time, you can actually save money in interest by selling your structured settlement and using the cash to pay off debt. Perhaps you’d like to buy a new house or invest that money in mutual funds. By selling your structured settlement annuity, you have the option of doing that immediately.
How Does it Work?
“OK, I’ve decided I want to sell my annuity. Now what?”
All you have to do is choose a company that buys structured settlement annuities. Decide whether or not you want to sell all or part of your annuity. Then, the company will auction off your structured settlement annuity to the highest bidder. Keep in mind, the company will charge you a fee for their services. This will come out of the money from the annuity that you are selling.
While selling a structured settlement annuity may not be the right course for everybody, it is an option for those who would like to have instant control over their personal injury settlement. Not all structured settlement annuities are able to be sold, so please check with your chosen company to see if selling your structured settlement is an option. As always, make sure you know all advantages and disadvantages of such an agreement before you sign on the dotted line.
About Greg
Interesting stuff! I did not know you could get a structured annuity settlement from an accident and then turn around and sell it. Thanks for sharing.
DC @ Young Adult Money recently posted..5 Products that Fight Indoor Allergies
I didn’t know either…but it doesn’t sound like a bad deal for some people with specific circumstances.
Interesting that not all are able to be sold. There’s some company that does ads on TV that make it sound as simple as can be. Something always told me that it’s not always cut and dry.
John S @ Frugal Rules recently posted..Is Black Friday All it’s Cracked up to Be?
There aren’t a lot of things that are cut and dry these days! =)
JG Wentworth!!! woohoo
Working at an insurance company, I know you can often get a case settled for a greater overall amount if you are willing to settle for a structured settlement… You have to be REALLY careful in selling your structured settlement because companies that purchase those usually try their best to purchase it at a greatly discounted amount to get cash to you now – be aware…
I agree- it’s always best to read the fine print with anything!
Very interesting! I was wondering what Jeremy’s company did! This is a concept I didn’t know about at all! I have a client that got a structured settlement awhile back. I wonder if this would make sense for them.
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It might be worth looking into. Have a great day!
I’ve know some people who’ve gotten settlements and have blown through them like it was Christmas. If you aren’t very disciplined, I’d probably suggest taking the payments, but if you are of the mind to pay off debt or buy or invest in something worthwhile, I can see the advantage in this option. I hope I never have an injury that needs a settlement!
Kim@Eyesonthedollar recently posted..Obesity in America: What It Costs Us
Yeah, no kidding. I got a settlement from a car accident that happened a few years ago. To make a long story short, I got two teeth knocked out while 4 months pregnant. 17K in dental bills and 18 months later it was all over. Now my teeth look great and I was financially compensated but at the time it really sucked.
Like DC, I had no idea that you could sell annuity settlement! You learn something new everyday!
Savvy Scot recently posted..Making Money from Smartphones
Lol, I hope people don’t look to buy a house after being injured. Use the money for long term care haha.
Veronica @ Pelican on Money recently posted..The Daunting Reality of Financial Woes
We were surprised 2 years after Dereks accident the insurance called us looking to settle the claim. We weren’t planning on pursuing anything, so we ended up with what felt like free cash. We put it on the mortgage.
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That is a good thing to do with a settlement. Can’t really go wrong with using “free money” to pay down debt.
I received a structured settlement when I broke my neck in a car wreck and received it as a lump sum. I didn’t put it into an annuity. A good rule of thumb is most all accident or injury payouts are tax free.
I did have a structured settlement annuity for my inheritance based on a medical suit, and received money when I turned 18, 21, 23 and 25 years old.
That is all, I have nothing of value to add here. Great info, thanks Greg!
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Like I said above, I got a settlement from my car accident….and mine was definitely tax free. Im thankful for that because if I would have had to pay taxes on it that would have been bullshit!
Wow I have never seen so many comments for a posting before. It seems like there will be more regulation coming for companies in the SS industry. Why do you think JG wentworth is in such a rush to sell themselves? Is it from the VC’s clamping down?
I sold my structured settlement after a car accident in order to help pay for some bills that were piling up. While it is not advisable to everyone to do it, selling you settlement can be an effective tool to take care of bills that require immediate payment. What was everyone else’s experience?
It was a good decision for me to make to sell my structured settlement
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