The dynamics surrounding structured settlement

A structured settlement is a legal technique used by courts to restore the income lost by a person through the fault of another person. Courts use this technique because most people lack the capacity to competently manage the huge payment stream awarded in a personal injury case. Thus, a structured settlement is viewed as a great way of guaranteeing the financial security of the affected individual. It entails an agreement between an individual (complainant) and a defendant. This results when the complainant files a personal injury lawsuit in a court and wins the case. The at fault person is mandated to provide regular income to the complainant based on the amount of cash proposed by a judge. The insurance company of the defendant agrees to offer compensation to the complainant through regular payments over an agreed period of time or for life. The insurance company provides money to fund an annuity policy for the complainant.

selling future structured settlement payments

The procedure for selling structured payments

Individuals have the right to sell their structured payments to raise the aspired lump sum. In undertaking this process, it is important to consult a financial advisor or review this source to get guidance on how to sell your structured settlement payments. A person can choose various selling options:

  1. Limited number of payments selling option: In this option, a person sells the payments for a particular period-the first year- to get the lump sum. The only payments affected are for the first year. In the following years, the payments remain unchanged.
  2. A portion of every payment selling option: This option entails selling part of every payment received within the agreed period. For instance, if the structured payments run for 10 years, an individual decides to sell part of every year’s payment. A person is still guaranteed of getting regular payments each year but in lesser amounts.
  3. Entire payment selling option: In this case, a person decides to sell the entire structured settlement payment and receives a very large lump sum. The person stops receiving regular payments completely.

Key reasons for selling structured payments.

Structured payments represent fixed contracts not subject to adjustments. This is a key reason that motivates many people to sell them in order to get a lump sum payment.

To acquire quick cash to settle emergencies such as:

  • To finance debts and loans– medical bills, education loans, mortgage loans
  • To amass startup capital for entrepreneurial activities.

Functions of structured settlement companies

When individual make a decision to sell their payments, structured settlement companies help them to acquire a worthy lump sum. Once customers contact these companies, they perform a number of tasks:

  • The companies’ representatives explain to the customer the amount expected from the sale of payments after computing the amount and considering the discount rate.
  • The company provides the customer with a contract if the offer provided is endorsed
  • The company seeks contract approval by a judge after which the sale of the payments is implemented.
  • The company sends the money to a customer’s bank account.
Strategies for choosing the right structured settlement company
  • Conduct extensive research to establish the credible of a structured settlement company.
  • Consult an expert in structured settlement to extend relevant advice.
  • Confirm that the company chosen offers a free and written quote.

A brief review of some of the best structured settlement companies

  1. J.G. Wentworth Company: It is considered a reputable company. It has been in the business of enabling individuals to sell their structured payments for over two decades. Individuals are assured of an attractive amount of money when they conduct transactions with this company. The company guarantees, exceptional and personalized customer services, an attractive price for customers, free quotes, bonuses and payments in advance.
  2. Olive Branch Funding Company: The company supports customers as they strive to sell their structured settlements. Comprehensive advice is rendered to customers by the company’s consortium of professionals who are well versed in matters to do with structured payments. The company’s main objective is to enable individuals acquire lump sum payment within the shortest time possible.
  3. SenecaOne Company: It not only focuses on lending a helping hand to individuals as they sell their structured settlements but also extends financial advice to enable them to inculcate good financial habits. The company has a strong culture of quick payment to individuals. Qualified individuals are able to receive an advance payment before the final payment is approved. Customers are treated to a wonderful experience since they are furnished with all the necessary information pertaining structured settlement services offered by the company.

How Get The Best Out of Selling Annuity Payments

Things have greatly changed, resulting to a similar change in life. One can now easily buy and sell goods and services from any Conner of the world. Therefore, anyone can get cash for annuity now only if they have it. So, if you want to have a secured future, investing in annuities will be an excellent way to do so. When you invest in annuities before your retirement, you can count on a better future especially now that the recession is taking over. The many other retirement plans in the market although great plans, come with some limitations.

What makes annuities great is the fact that, they do not restrict some contributions you can invest. With annuities, you never have to deal with mandatory withdrawals. This is why many Indian retirees are considering annuities the better option as compared to other forms of retirement plans. What makes people so crazy about annuities is how fast they can be sold for money. Yes, if you need money urgently, there are so many immediate cash for annuity payments available. The annuities you can sell should be those of which you own. There is no way you can get cash for annuity now if the annuity you are planning to sell does not belong to you. If you inherited the annuity and you can prove it with legal documents then, you can sell it.

sell annuity for cashYou may decide you need a lump sum of money for an emergency. Well, you can always get immediate cash for annuity payments. People have different reasons for selling their annuities. Some people sell their annuities to buy a new house, start new businesses, and pay for children’s education and others. Because annuities are free from taxes, you can decide to sell all of your annuity out or simply sell some of it. When you sell all your annuities at once, you can be caught by the tax services who would want to take their share. It is why it is advisable to sell some of your annuities. Living during these times is nothing to smile about. But still, you cannot sell the annuities without taking advice from your attorney. Most times, selling annuity payments tend out to be a wrong move in the long run.

The more annuities are saved or kept untouched, the more they become better investment policies or, the more the amount on them grows. Therefore, is always good to buy annuities some years before your retirement. This way, you can rely on a great retirement life. There are different types of annuities that any Indian can invest in. Make sure you check out the credibility of the insurance company before you do so. Annuity investments pay in the long term, so consider investing in annuities.

Selling Your Annuity Payments Made Easy

  1. Contact the insurance agency first and check whether there is a way that you can take advantage of the annuity for its incentive rather than sell it. You could wind up with a greater amount of the cash along these lines, rather than paying the charges that happen when you sell annuity payments. You will more than likely need to pay some punishment for trading it in for money. Remember that every annuity can accompany distinctive terms, so you won’t know the terms if you don’t call and inquire.
  2. Contact a company, externally and know if they can buy the annuity for you. Ensure that you approach them for a free quote. You can discover an assortment of organizations which sell this administration while seeking the Internet or you could simply contact your insurance agency for a suggestion. Whatever you do, look at the organization’s audits from different merchants to perceive what sort of notoriety that they have. What’s more, don’t make do with the main quote; ensure that you do some examination shopping so as to locate the best plan.
  3. Check the difference in quotes offered by various insurance agencies and the organizations on the auxiliary market. The cash is yours, and you would prefer not to need to give some portion of it to the organization. By contrasting quotes that you got with sell annuity payments, you will be better ready to think about which organization will sell you the best rates/fine expenses.

A Practical Guide to Choosing an Investment Account Overview

Investment Picture

Opening an investment account is a crucial first step to saving wisely. Today, you have the option to invest through a discount brokerage account, a mutual fund account, a full-service brokerage account, or even a bank account. You should pay extremely close attention to fees when choosing an account, since seemingly small yearly charges can act as sharp brakes on the amazing effects of compound interest. Discount brokerages are an appropriate choice for many, since they combine low fees with the widest selection of investment options. It is relatively easy to select a discount brokerage firm since competition has lowered fees substantially.

 Why Expenses Matter A Lot

Cooking is something that I have a love-hate relationship with. Although I love being able to control exactly what goes into my body, having an unlimited array of culinary possibilities, and saving money by not eating at restaurants, I hate figuring out what combinations of food will taste good, burning rice for the third time in two weeks, and spending time in front of a stove with a potholder and not in front of a TV with a beer. Frequently the tension of this dilemma is resolved with a takeout order. I am perfectly okay with this, because it is still relatively affordable to outsource this part of my life for $10 a meal or so. But if local takeout places were charging $10,000 a meal, you can bet I would be in a cooking class in no time. No one would eat out at those kinds of prices.

Yet an equivalent price structure exists in the world of investment management, and rather than learning to cook, most people are instead opting to pay $400,000 for a hamburger that has been sitting out in the sun too long.

To see why, let’s bring back Jill and Average Joe.

Imagine each makes an identical $100k investment that earns 8% a year before fees. Jill invests directly in a low cost index fund that charges a fee of 0.2% of assets. Average Joe invests in an average mutual fund through an average financial advisor. The mutual fund charges a management fee of 1.3% of assets (not all funds are as expensive, but 1.3% is about average for an actively managed fund), and his financial advisor charges a fee of 1% of assets for managing the investment on his behalf.

To Joe, it seems like it is well worth it to pay roughly 2% of his assets a year for the convenience of professional management, especially when his investments are easily earning more than this every year. But in actuality he is reducing his returns by a stunning amount over time. After 30 years, Jill’s account would have grown to $952,000 whereas Joe’s account would have grown to only $528,000. Solely by paying 2% a year less in fees, Jill will be nearly twice as wealthy as Joe. The fees that Joe paid did not seem high relative to the returns he was making at the time, but over the course of 30 years they ended up “costing” him $424,000, or four times his initial investment.

Where the “Value” of an Investment Comes From


Often, commentators will talk about a stock or bond as being particularly “overvalued” or “undervalued.” Such a description poses the question of how to define “fair value.”

The theory of intrinsic value says that an investment’s price should equal the value it would have to a buyer who planned to hold it forever (even though, with the advent of secondary markets, most investors do not actually do so). Investors who plan to hold a stock or bond forever are not concerned about what the asset is trading for on secondary markets, they are simply concerned with the value that they will receive from the annual or semi-annual interest, or dividend payments. Thus the value of a stock that is correctly priced today should be the present value of its future dividends.

The idea that a string of dividends going forever into the future has a “present value” seems a bit strange at first. But it makes complete sense in the context of what economists call the time value of money. The basic idea is that receiving $1 today is worth more than receiving $1 five years from now. You can think about this in three different ways:

  1. If you had a dollar today you could invest it in a guaranteed bank account or certificate of deposit (CD).
  2. You can buy more things with a dollar today than you will be able to with a dollar five years from now, the same applies for your annuity payments, Washington Accord experts claim. This is because of inflation, the slow rise in the cost of living over time. For instance, a dollar in 1970 bought four loaves of bread; today it will not even get you half a loaf.
  3. If you are human, you probably would prefer to spend a dollar today, even if it could be used to buy the same things five years from now. Most of us prefer immediate gratification to delayed gratification. Given the choice of eating cake now or eating cake one week from now, we choose now. Which is not to mention that many of us have to spend money today for things like eating, which cannot be delayed indefinitely.

Because dividend payments received in the future are worth less than those received today, we need to apply a discount rate to them in order to express what they are worth to a rational investor today.

If we know or can observe what the time value of money is, than we can place a dollar value today on the promise of $1 five years from now. In doing so, we are “discounting it back to the present.” And if we can place a current dollar value on the promise of $1 five years from now, then there is no reason we cannot place a current dollar value on any stream of future dividends or interest payments.

This is precisely what is needed to value a stock, bond, or any other kind of investment – estimate the income the investment will provide at each year in the future, and discount it back to the present at an appropriate time value of money.

A good estimate for the time value of money today is the interest rate on a very safe investment, such as U.S. Treasury bonds (IOUs from the U.S. government). There is a kind of Treasury bond known as a zero-coupon bond. If you purchase a zero-coupon bond, such as a U.S. savings bond, you receive a guaranteed amount of money at a specified time in the future, but you do not receive any interest payments until then. Because of this, the price of a zero-coupon bond that will pay us $1 ten years from now will be much less than $1 today, and this price is just the time value of money. For instance, if a ten year zero-coupon bond that pays $100 at maturity is selling for $60 today, then that means that $100 ten years from now is equivalent to 60 of today’s dollars.

Table 3 – Present value calculation for a hypothetical investment paying a $10 dividend for 5 years

In the Bill and Ted example, the intrinsic value of Ted’s investment will always be his best guess on how many bushels of corn Bill will give him in the future. This would vary with the probability of success of the project and/or Bill’s credit worthiness. In today’s markets, intrinsic value equates to the estimated future dividend or income stream of a company, discounted back to the present to reflect the time value of money and the riskiness of the investment.