Authored by Jayant Row in Finance
Published on 04-13-2009
A structured settlement is a settlement received by a person to settle an insurance or personal injury claim which includes periodic payments to be made to the person in lieu of a lump sump payment. Structured settlements are tax free and have an added advantage if senior citizens or children are concerned. Structured settlements guarantee a steady flow of income but carry the risk, that the person or entity making the settlement can stop making payments to you and force you to seek legal recourse once again to enforce the continuity of payments. There may also come a time in life, when you as the person who is receiving these structured periodic payments, do feel the need to raise some cash for yourr own purpose. It is here that the concept of selling your structured settlement comes in.
It is possible to sell your structured settlement for cash if you are fully aware of the terms and conditions of the structured settlement which you have entered into legally. There may have been conditions which you have agreed to, which do not allow you to sell the lump sum amount. In case this restriction is not there you can sell the settlement for cash. But there is a premium to pay for this and it would probably mean that you have to settle for less cash than that envisaged in the original settlement.
In case you do decide to consider the conversion of your structured settlement into cash, there are companies who do this sort of business and are all available on the internet. So do your searches for these companies or take advice from your financial consultants. Get in as many quotes as you can before you decide to settle on the one offering you the best terms. Make sure that the companies you contact have a good reputation for fair and scrupulous dealings, before you even ask for the quote. This is easily possible because most of them are compulsorily registered and have to regularly submit themselves to the scrutiny of the authorities. Check for their ratings if they have them and deal only with those in the top drawer. Maybe you will get a little less than you envisaged, but these companies being professional would have covered all loose ends for you before they make you that offer. If all fails or you are not satisfied with your inquiries make a beeline to a professional. It is better to pay his fees and make sure of completing your conversion without problems, or the chances of you being taken for a ride. .
Please remember that once you opt for that cash for your otherwise structured settlement you are on your own and would have to manage this lump sum on your own. You would need to be aware of the loss of your tax free status and that you would henceforth have to manage your money more carefully to reduce your tax liabilities. While you were receiving the periodic payments from the structured settlements, you were not worried about how the lump sum if any was invested and were also fully protected legally. So consider this before you sell your structured settlement for cash.