Is a Lump Sum For Structured Payments a Good Choice

Is a Lump Sum For Structured Payments a Good Choice – People who have been awarded a structured settlement in a court case or whose lottery winnings are paid out as an annuity sometimes choose to sell the rights to their settlement in exchange for a lump sum of cash. They may choose a lump sum to handle bills, make an investment, or pay educational expenses. Perhaps they want to be able to invest a large sum to take advantage of compounding interest. The reasons are as varied as the people who receive structured settlements or annuities. In many cases, a lump sum is preferable to payments that may stretch out for decades.
Advantages of Selling a Structured Settlement
The main advantage of selling a structured settlement is acquiring a large sum of cash immediately. Sometimes people who are awarded this type of settlement in a personal injury case need a large amount of money to cope with bills and expenses while they are out of work. Additionally, once a settlement is sold for a lump sum, if the person or entity making the payments should declare bankruptcy or otherwise breach the contract, collecting from the payer is the problem of the company that bought the structured settlement. In other words, if you sell a structured settlement and the payer stops making payments, you’re not left holding the bag.
Other Types of Annuities May Also Be Sold
While lottery winnings and court settlements are common types of settlements that are sold for a lump sum, other types of annuity payments may be sold as well. For example, annuity payments from an insurance policy may be sold for a lump sum. Suppose you have invested in an annuity that is currently paying out, but you suddenly need a large sum of money. You can sell the annuity in exchange for a lump sum for annuity payments and have your cash in only a few weeks. In these types of cases, court approval may not be required.
Weighing the Pros and Cons of Your Situation
If you receive payments from an annuity, a court settlement, or a lottery win, only you can weigh the situation and determine if receiving a lump sum for annuity payments is right for you. When you sell a structured settlement for a cash sum, you do give up part of your eventual annuity value. When working with a company that buys structured settlements for cash, make sure you clearly understand what you give up by selling for a lump sum. Many people conclude that having a large sum of cash right away is the best choice for their particular financial situation.
Receiving Cash Quickly
Sales of some annuities for cash do not require court approval, and in these cases, you can have your cash in as little as two weeks. With sales of structured settlements that must receive court approval, count on the process taking from 30 to 60 days from the time you start the process until you have your cash. The specific length of time depends on the laws in your state.