Structured Insurance Settlements

Structured insurance settlements didn’t come to the United States until the 1970s as allowable option instead of the lump sum payment.  Some financial advisors prefer their clients get structured payments because the client will receive payments long after the pain that caused the settlement has passed.  The insurance companies prefer the structured settlements because it’s not a large of a hit to their cash flow and it balances out their risk over a longer period of time.  I personally hate the structured settlements and think you should sell structured settlement payments as soon as possible.  If the judge forces one make sure the payment is assigned to a third party or an annuity because you don’t want to have to depend on the defendant to keep making the payments.

The structured payment is horrible because a judge and lawyers determine what the worth of your money is not you.  Many times they’ll argue the value of the money is inflation or the payback on a treasury bill.  However, if you have a mortgage or high interest credit card debt at 24% your personal ability to earn more money with the lump sum would have made a much larger impact in your life.  Even if you have no debts you may have a business idea or understand some investing basics.  Again if your business or investments earn 8% – 12% per year you could be multiples richer over the life of your payments.  The last reason structured payments are horrible is they make most people worse with their money and job habits because they know the next check is coming.

Good thing for you it is completely legal to sell the payments to someone else for a lump sum of money.  There are lots of structured settlement brokers who will be happy to discuss options with you.  Feel free to call around and negotiate, this is your money and they want to buy the contract from you.   If you need help with the math hire a financial advisor to review each offer with you.  Often the terms can be complex, and you’ll need someone with experience in the area to decipher the terms into common sense.  You’ll need to be open with your financial advisor so they can understand how you intend on using the money so they can pick the terms that work best for you.