Selling a Structured Settlement
for a Lump Sum of Cash

Is it worth it to sell your structured settlement? While selling your structured settlement might be a convenient way to get your hands on some quick cash, you may want to research some of the advantages and disadvantages of selling it.

 

If you are currently receiving regular payments from a structured settlement, you may be able to trade in a portion of your future payments or all of them for a lump sum. Let’s delve into what structured settlements are to give you a better idea whether you should sell or keep your structured settlement.

 

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What Exactly Are Structured Settlements?

Sometimes structured settlements can be a great source of passive income. However, if you have unexpected expenses that arise out of nowhere, you may find yourself in an immediate need for some fast cash. In such as case, you may want to sell your structured settlement for a quick lump sum.

 

When you have a structured settlement, you are guaranteed to have annuity payouts from compensation awards, lottery winnings, or due to an injury suffered where the person liable can pay you regular payments over an extended period of time without going bankrupt.

 

Structured settlements are specifically designed to offer a degree of financial security because if you receive a lump sum of money, you may make bad financial decisions and ultimately end up in a dire financial situation.

 

Thus, if you are physically unable to work due to being injured in a work-related accident and you are no longer capable of earning the same salary that you were previously earning, your regular payments would provide you with a security blanket of regular, passive income.

 

How To Find A Buyer

The majority of companies that generally buy structured settlements may present you with alternative options to sell just a portion of your structured settlement rather than selling it all at once. For instance, a company may offer to buy half of the structured settlement and then stipulate that future payouts can be split between the two parties at an agreed amount. Many companies have different policies so it is best to research what their policies are before making a decision.

 

Ultimately, do not ever rush when selling your structured settlement because there are plenty of companies that are illegitimate. Be sure to do your due diligence because some companies may have offers that are dubious. So beware and do your research.

 

Structured settlements can be sold rather easily to third parties such as companies or individuals who want to buy them. They are extremely flexible to sell. When you decide to sell your structured settlement, the way it works is that you agree to give up your rights to the payouts for an agreed period of time. For example, you agree to give them up for 15 years or permanently. As a result, the third party company that purchases your structured settlement will compensate you with a lump sum.

 

The total amount of money that you can expect to receive will differ depending on the company that you are selling it to. Keep in mind that the total value of your structured settlement will be lower than the total of all future payments you are entitled to because of all of the various factors involved, such as inflation.

 

What Options Are Available When Selling Your Structured Settlement?

There are two options available to you when you are selling a structured settlement. First, there is what is known as a full buyout. Secondly, there is what is known as a partial buyout. Let’s delve into the details of what each of them contain.

 

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Full Buyout

When selling a structured settlement, a full buyout is the most common option for sellers. A full buyout can be best described as selling the annuity in its entirety all at once. In cases when full buyouts occur, people generally want a lump sum paid out as soon as their compensation is agreed upon. However, insurance companies generally do not offer to pay out the entire amount of the settlement all at one time. Therefore, people that want their money as soon as possible will look to sell their structured settlements to companies willing to buy them.

 

Generally, when people decide to opt for a full buyout, they want the money up front because they want to invest the lump some in something that will generate more profit, such as a lucrative investment. This will generally accepted by a judge in court. Remember: a judge must grant you approval in a court in order to sell your structured settlement annuity.

Another reason why people may decide on a full buyout may be when they have unexpected expenses that they are unable to afford such as purchasing a home, medical costs, college education, debts, etc. These types of situations can also be approved by a judge in court because they can improve the policy holder’s quality of life and are viewed as legitimate reasons for selling.

 

Partial Buyouts

Partial buyouts are exactly what they sound like. They are the best option when the person selling them only needs a small amount of money for immediate needs. With partial buyouts, only a specific percentage of the annuity would be available for sale instead of the entire amount of the structured settlement.

 

One advantage of partial buyouts for sellers is that they get to retain some of the future payments they receive on a monthly or annual basis rather than selling them in their entirety such as is the case with a full buyout. Partial buyouts are generally recommended if you do not want to sell the entire annuity. Be aware that buyers of structured settlements will always pay considerably less than what the policy is worth because they want to make it profitable for them. Buyers are not charitable and always look to profit from these types of transactions.

 

When giving a reason to a judge for selling your structured settlement in a partial buyout, judges are more lenient because the reasons for partial buyouts are normally what are considered acceptable by the court such as recent job loss, home repairs, auto repairs, healthcare expenses, etc.

 

Ultimately, when you decide if you want to sell your structured settlement annuity, be sure to consider the two selling options that are available to you: full and partial buyouts. Consider the advantages and disadvantages in order to make a well informed decision.

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