Accounts Receivable Factoring

The Downside of Purchasing Structured Settlement

Purchasing structured settlement money is one of the options you can take when you are entitled to compensation as a result of personal injury or some other reason.

Whilst structured settlements are definitely one of the safest options you can take, it’s worth considering the disadvantages of them before you commit to any decision.

The main thing that you need to understand, of course, is that when you opt for a structured settlement annuity, you will not be receiving all of the money you are entitled to in one go.

Instead, you will receive regular payments on a monthly or yearly basis, according to a pre-defined schedule.

It’s also likely that you will find it difficult to obtain a loan on your structured settlement, should you suddenly need a cash injection.

Finally, the possible returns on your money will most likely be much lower than if you take all the money in one go and invest it somewhere.

Structured settlement payments over time

This can be a benefit or a hindrance, depending on your viewpoint. For many people, purchasing structured settlement money may be the smart thing to do, as it will prevent them from spending the money too quickly and ensure they always have some form of financial support. 

However, this could prove to be incredibly frustrating later on should you suddenly need to get your hands on a large sum of cash in a hurry.

Possible investment opportunities may arise, or you could face unexpected healthcare costs, in which case the only way to obtain money is to try and obtain a court order allowing you to sell all or part of your annuity to a broker for a lump sum.

If you do get permission for a structured settlement sale to a broker later on, you will lose a significant portion of your overall payout award.

No borrowing against future structured settlement payments

Unfortunately, structured settlements are regulated by certain laws that make it difficult, if not impossible, to borrow against future payouts.

While some structured settlement loans are allowed, the bank or money lender will have to seek and obtain permission from court before a loan can be secured with any future payments, and many are unwilling to go through with this.

Alternatively, if you do find a lender willing to offer you a loan, you can expect to pay higher interest rates due to the extra complexity involved.

Low return on investment

Just like virtually any ‘safe bet’ you can make, purchasing structured settlement money will not provide you with very much in the way of investment returns.

Because you only receive small portions of the money in stages, it’s very difficult to do anything with the money except use it for living costs, or maybe finance a short holiday somewhere.

If you trust your financial acumen and profits are your goal, you may well be better off in talking to a financial advisor and trying to invest the lump sum instead.

At the end of the day, purchasing structured settlement money is a safe move, but should you need cash in an emergency or some investment opportunity come up, you could regret not taking the lump sum.

From the Downside of Purchasing Structured Settlement back to Home Page

Search This Site:

* * * * * * * * * * * * *

Structured Settlement Book

Get Your Copy Here Today!

* * * * * * * * * * * * *

About | Contact | FAQ - Frequently Asked Questions | Privacy & Disclaimer | SiteMap | Bookmark This Site!

Copyright © Structured Settlement HQ -
All Rights Reserved

Return to top Website design by SBI!