People who want to sell structured settlement payment annuities usually have a ton of questions before they begin the process, something which is understandable given the complexity and sometimes confusing nature of the industry.
Therefore, in order to avoid getting cheated by unscrupulous companies and receive a fair amount for your structured settlement policy, you should know the answers to the most common questions that people have.
Only you can answer this question. Many people prefer the security that comes with knowing they always have the next installment of their annuity to look forward to.
Other people think that they would be better off receiving all the cash straight away, so they can use it to buy a house or invest in a business. You have to consider what you really want the most.
Don’t just sell structured settlement payment annuities for the sake of it though. You should always make sure you have a plan for the money.
This will depend on the small print in your policy. Most of the time, receiving cash for structured settlement payments is allowed, although some policies do contain a clause that prohibits any kind of sale.
If you are unsure about your structured settlement policy then you can go to a lawyer or a broker and ask them to look through it for you.
Alternatively you can just go ahead and forward your policy details to a buyer and ask them for a quote. Most companies will look very closely at your structured settlement and will no doubt inform you if a sale is not allowed.
You need to be careful of this one. You don’t actually have to pay anything to sell structured settlement payment annuities; beware of any company that asks for payment to proceed with any kind of transaction.
There may fees of course, but legally these need to be fully disclosed in the transaction documents before they are processed, so you will be able to spot any buyer that is trying to charge you exorbitant rates.
The real cost of selling structured settlements lies in the discounted rate that companies buy future payments for.
Structured settlement companies are in the business to make a profit, and the quotes you get offered will amount to considerably less than the full value of your annuity.
Realistically, you can expect to lose as much as a third off the total remaining value of your policy – including discounted rates, deductions etc.
Will I have to pay tax if I sell my structured settlement?
Unfortunately yes, taxes will be one of the big deductions when you sell your annuity.
While structured settlements are exempted from taxes, selling the annuity suddenly makes you liable – there’s no getting out of this, the taxes will even be deducted before you get your hands on the money.
Therefore, you will have to decide whether or not it’s worth sacrificing a significant sum of money to sell your structured settlement.