Structured settlements, most commonly seen in disability and life insurance payments and commonly referred to as annuity settlements, are intended to give individuals a steady stream of income over several years or decades.
Yet in recent years, there has been an influx of companies that will offer to buy the rights to your structured settlement payments in exchange for a lump sum. To many people, the idea of getting a lump sum — all the settlement money at once — seems like a much more attractive financial option than structured settlement payments.
However, getting cash for your structured settlement might not be the best choice for your unique financial situation — and once you sell your structured settlement annuity, you have to stick with your lump sum. There’s no way to reverse selling a structured settlement.
Could you be making a mistake by seeking out your structured settlement cash now? Here are three of the biggest reasons why it’s better to stick with your structured settlement rather than selling it:
Structured settlement payments help you develop discipline
It’s been statistically proven that taking a lump sum instead of a series of structured settlement payments can be a big financial risk. When you have all your settlement money at once, there’s nothing to stop you from spending it all at once. Regular structured settlements, on the other hand, help you develop financial discipline and keep your spending under control.
Did you know that structured settlements are taxed much less heavily than lump sums? By sticking with your structured settlement, you could save you anywhere between 25 to 35% on taxes that would have otherwise applied to your lump sum payment. This means you get significantly more money over time with a structured settlement, even if you don’t receive it all at once.
Save on transaction costs
The companies that buy the rights to structured settlement payments don’t do so for free. In fact, these companies typically charge interest rates between 8 and 20% when buying your structured settlements. Ultimately, this means you leave a good portion of your money behind.
Have any other questions, comments or thoughts on getting cash for your structured settlement? Learn how to sell your structured settlements the right way by leaving a comment below. Visit here for more.