How to Use Settlement Funding to Sell Annuities

Sell Structured Settlements for Cash to Go From Income to a Lump Sum

Sep 24, 2009 Carol Finch

The regular income from structured settlement annuities may be useful but many people find that they would prefer a lump sum. How can structured settlement funding help?

It's quite common for insurance claims to be paid out on a structured settlement basis rather than as a single lump sum payment. The insurance company in this situation will offer to set up an investment product (usually an annuity) that will pay a regular income over a set period of time. This may sound good to start with but, down the line, many people change their minds and start wishing they had a lump sum instead. Many find that selling their annuity deal to a structured settlement funding company for cash is a way of doing this.

How Does Structured Settlement Funding Work?

The buying and selling of annuities in general is widespread in the financial sector. Many businesses operating in this field will buy structured settlements just as they would buy a regular annuity. A consumer that sells a settlement this way basically does it to access larger sums of cash or to release cash from their deal more rapidly.

In some cases a consumer may opt to sell all of their settlement agreement at once. In others they may simply sell a specific part of it. The decisions taken here really depend on personal circumstances and what the individual wants/needs the cash for. Some simply want to switch from an income to a single sum and some want to free up some cash but still hold on to their core settlement.

In either case, the funder may be able to help. All an individual needs to do is to:

Tell the company about their settlement to check if they can sell it.
Specify how much of their payment deal they want to sell.
Look at the quote that the company gives them.
If the quote suits them then they can arrange to set the deal in motion.

Although this part of the deal may be relatively simple, this kind of sale can take time to arrange. In some states it may involve going before a judge to get approval for the process to go ahead, for example. The company agreeing to buy the settlement will be able to advise on the actual timescales and legal restrictions that may be involved.

How to Get the Best Structured Settlement Lump Sum

Don't assume that any company that may be willing to buy a settlement annuity will pay exactly what it is worth. They need to turn a profit so won't necessarily give face value offers. To get the best possible deal, consumers may want to:

Shop around for quotes.
Check that there won't be any tax implications or costs related to the sale.
Consider using a structured settlements broker to see if they can get a better deal.

Consumers may be wise to think hard about what they may be giving up before they decide to sell their payments. Selling all of an annuity will take away the regular income element. They may also lose in the long term as their structured settlement funding offer will not pay as much as their current agreement would over time.

The copyright of the article How to Use Settlement Funding to Sell Annuities in Personal Budgeting/Finance is owned by Carol Finch. Permission to republish How to Use Settlement Funding to Sell Annuities in print or online must be granted by the author in writing.

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