Structured Insurance Settlement: An Overview
Winning a court case may not mean winning a large single payment. It may mean receiving a structured insurance settlement. This can sometimes work in your favor if you are able to negotiate the terms. Even if you end up with a structured settlement instead of a lump sum there are ways to get a lump sum payment if you are willing to take a drop in money.
For some people, structured payments are a form of security. These payments become guaranteed income for a specified length of time. Many times this happens because the insurance company buys annuities for the amount of the payment. These are investments. The annuities provide the guaranteed income.
When accepting a this form of payment option, it is best to negotiate the terms so that you can have the money in the way that best meets your needs. You may have some large immediate bills that you need covered, after which the regular monthly payments will be sufficient for you stay within your budget. Negotiating what you need will make this form of payment a more livable option.
If you are not given a choice in the type of payment structure and you find that the structured payments do not meet your needs, there are many companies that will purchase your annuities and give you a lump sum payment for them. Doing this will mean that you should ensure the earnings or distribution on the lump sum will cover your future needs.
Many people do not have the money management or personal skills to handle large lump sum payments. This is one of the reasons that annuity payments are by far a better route to take for most individuals. Structured payments insure that you will have an income for your future. You won’t need to worry about the stock market or other economic eventualities when it comes to the security of your money.
Nearly all court settlements involving large sums of money from insurance companies are handled as structured payments. There is the added benefit that in most cases the payments are tax deferred. A lump sum payment would not have this tax incentive.
Winning a structured insurance settlement can be a way to secure your financial future. Make certain that you are aware of the potential for exploitation in this area and protect yourself. Many times the value of the annuity is overstated. Sometimes the insurance company receives a rebate on the sale of the annuity, thereby decreasing the actual amount they spend on the settlement. One way to get your full due is to stipulate that any and all rebates go to you rather than to the insurance company.
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