Accounts Receivable Factoring

Investing in Structured Settlement Money

The potential of investing in structured settlement money is a fascinating one which can ensure investors receive a steady stream of money for a period of many years, and as such, this kind of opportunity is well worth considering if you are looking for reliable investment returns.

So long as you perform a careful check of the insurance company that underpins the structured settlement you are considering buying, you can be sure that your investment in this kind of policy is very low-risk and more often than not, hugely rewarding. 

People often sell structured settlement payments at significantly less than the overall value of the policy, usually because they are in desperate need of the money now – something that makes this kind of investment very popular with smart, long-term investors.

Who is selling structured settlement money?

The market for structured settlements is quite unique and is operated almost exclusively by structured settlement brokers, who will be approached by individuals wanting to sell their annuity outright as opposed to applying for a structured settlement loan.

The broker’s job then, is quite simple in theory – he or she merely has to find a buyer for the settlements they are trying to sell.

Brokers play an essential part as they will be able to negotiate between buyer and seller, and also advise on the legal processes involved, as it will be necessary to secure court authorization to complete the transaction.

Why do we need to go to court?

Court approval is essential when trying to buy any structured settlement payment as these kinds of annuities are regulated by the Federal Structured Settlement Act, which was brought about to protect individuals from companies or private investors that operate unfairly.

According to the act, the investor must disclose everything about the deal to a judge, who can then make a legally binding decision about whether or not to allow structured settlement money to be sold or not, taking into consideration the current needs of the seller versus their needs for future financial security.

Calculating how much to offer when buying a structured settlement

You can use a structured settlement calculator to help you decide how much to offer for structured settlement money.

This tool can help you to calculate the current value of a structured settlement annuity – to which you can then apply discount factors to work out a fair yet profitable offer.

One key factor that will come into consideration is whether or not the annuity you are buying is a lifetime policy or a fixed-term policy.

Risk concerns

Buying structured settlement money, although usually safe, is not without its dangers.

Before investing in any structured settlement, you need to educate yourself fully on all the legal aspects of such transactions, and then thoroughly explore the potential earnings you can make from each deal you consider.

The only real risks are that, firstly, the insurance company that underwrites the settlement could go bankrupt, meaning they are no longer able to make payments, although such instances are extremely rare.

Secondly, you need to be careful with your factoring to make sure the venture is profitable.

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