Structured Settlement Lump Sum Payouts

FinanceWealth-Building

  • Author Amit Raju
  • Published March 21, 2008
  • Word count 520

Structured Settlement Lump Sum means getting your entire compensation at once, instead of receiving smaller amounts over a long period of time. If you have suffered an accident and as a compensation you have been awarded by court to receive a Structured Settlement, then it might be up to you to decide which option to choose - lump sum or monthly payments.

A new practice that has started only just a few years ago is to sell structured settlements for a structured settlement lump sum. But that's not always the best choice one can make. It depends on the circumstances. If you are in a desperate financial situation and in a real need of quick cash, then getting a structured settlement lump sum is perhaps you best bet. But have in mind that you will eventually end up loosing anywhere between 30-50% of the total amount that you would normally receive if you stick to the monthly payments. This is the hidden trick that insurance companies buying structured settlements usually forget to mention. The good news is that you can sell just a part of your structured settlement. But if you don't have the luxury of waiting and circumstances are pushing you in a really tight spot, then selling is your only choice. But you must provide the court with a good reason as to why you would be selling your structured settlement in order to be legally allowed to make the sale.

Be ware of the drawbacks related to receiving a structured settlement lump sum. The main one is that regular structured settlements are tax free, although the investment income generated by them is not. Another benefit of getting monthly payments is that they are a very stable source of funding, and many people who suddenly receive a larger amount of money fail to make the right decisions and actually end up squandering a large part of it. Unlike getting a lump sum, with the fixed monthly payments, you don't have to worry about investing money or doing something else that's risky as you can just stick to what you have.

Perhaps the biggest advantage of getting a structured settlement lump sum is that you can put the funds in the bank and let them build a solid interest. Or you could use those funds to buy a new home, new vehicle or anything else that require a substantial investment. And there are other cases when one can be in a need of a larger sum of cash such as for covering medical bills, college fees for the kids.

Remember that Structured Settlements cannot be changed. According to the law, once you agree to accept an annuity, you cannot trade the annuity back for a lump sum payment. This is because they have special tax advantages so once an agreement has been reached, you will be stuck with it for better or worse. So think twice before making your final decision.

You can choose structured settlement annuity sale for lump sum if you are sure you will invest the money properly. Some people receive a massive structured settlement payout.

Amit Raju owns and operates http://www.structuredpayout.com, focusing on Structured Settlement Sales

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