Our goal here is to educate you with the proper tools and knowledge so you can make an informed decision on whether it makes sense to sell your settlement payment rights or to do a 15 minute consultation and hold onto your payments. As an alternative to JG Wentworth 855 7 500 NOW we provide you an opportunity to get extra money to pay your bills without the obligation of having to sell your payment rights.
Explain to me what a structured settlement is?
A structured settlement is an agreed upon arrangement by which payment rights are constituted for damages on account of a wrongful death or personal injury to yourself or a close loved one. As a result of the settlement the recipient will receive payments that are made over a period of time. Sometimes payments are guaranteed for the the lifetime of the injured party, rather than as a single lump sum. It may be payments that are paid in monthly intervals, it’s possible that they are quarterly, yearly, and possible that they come with a COLA which means a cost of living increase to compensate for inflation and other increased expenses during the recipients lifetime. For clarification the most common that we deal with is wrongful death which is included in the definition of personal injury, in which lawsuit and litigation cases result in compensation being paid out to one or more of the survivors.
This arrangement may be voluntary, in the case of a pre-settlement; in which it may be made in lieu of appeal after an award is rendered; in other situations it may be imposed when the plaintiff, defendant, insurance company, or other parties involved due to statute or by a judicial authority. This would most likely be the case in a lawsuit involving a minor who’s under the age of 18 years of age. In cases regarding a minor the arrangement may be unfunded at the time of settlement and the plaintiff may have a specific date in which the funds are received. In such a case the defendant would have agreed to make a future set of payments at an agreed upon date using its then available funds or funds from the insurance company. If it’s not funded by these means than there are alternative funding options.
Life Insurance Companies relation to the industry
Structured settlements and annuity contracts are instruments that have been favored by insurance companies for more than 20 years now. Thanks to the flexibility and have become the favored funding instruments because life insurance companies price them competitively and make available a broad range of benefit options, allowing for flexibility of settlements designed to let the insurance companies make payments over a period of time instead of a lump sum all at once.
Going back to 1979 approximately $150 million dollars in annuity premium was received by life insurers from 3rd party sources for funding periodic payment obligations due to annuitants. For the last 20 years that number has ballooned to be between $2 billion and $6 billion each year. While some years may have less recipients the total dollar amount of settlements has held steady or grown. You can see a breakdown of the billions of dollars in the primary industry by year here.
Casualty insurance companies and self-insured corporations partake in the structure settlement industry. You may notice that your check comes from one of these popular insurance companies each month unless you are using a servicing company such as Allied Servicing Corp or Goldstar who may be the ones sending you your structure settlement check. The use of lump sum payments is not always ideal for an injured victim as we want to be responsible for our actions by creating a stream of payments that properly forecasts the plaintiffs future financial needs and loss of income as a result of the accident. We are all fallible however and realize that it is not always possible to invest and manage money over the period in which it is needed. That’s why you see in the secondary market the opportunity to sell your settlement in a factoring transaction.
Selling your lawsuit settlement payment rights
Now that you’re learning about structure settlements it’s important to understand the process of selling and the risks. When you sell an annuity payment you’re actually selling the right to those payments. The insurance company whether it’s Pacific Life, Berkshire Hathaway, AIG, or another well known insurance company called the qualified assignment company. As of 2020 there are only 4 A++ rated insurance companies. Those companies are Mass Mutual, USAA, Berkshire Hathaway, and New York Life.
When you’re looking into selling your settlement payment rights it’s crucial to look at the amounts that are due and the dates those payments are to be made. The calculated numbers you should be looking at are the discounted present value of the payments you are selling. This calculation of discounted presented value is important to understand how you’re annuity or structure settlement payments are being valued. The annuity issuer should be able to give you the details about your payments. If you have sold your payment rights or are in talks to do a sale right now then we would ask you to request from your sales representative an itemized list of all the fees, costs, expenses, and commissions associated with the transfer deal you’re doing with their company. Ask if any other charges are deducted from the payee from the gross at the end of the transaction. If the transfer agreement is breached find out if there is a penalty and if you will end up owing funds back to the company or broker who is assisting with the transfer.
There are a lot of advantages for the plaintiff who’s now looking to sell their lawsuit settlement. While the periodic payments were created to match the income lost it may no longer be that way as things have progressed. Without proper financial management experience though you need to be careful when considering a factoring transaction. We have seen unofficial statistics that annuitants have spent their non-periodic payments in 5 years when they receive a lump sum versus a structured settlement. You also lose the tax benefits when opting to receive a structured settlement.