There is no real simple answer as each company that buys structured settlements is doing so to make a profit based on your payments. Are you wondering how someone can buy a structured settlement for cash and how the whole process works?

If you are receiving income from a structured settlement annuity, those payments are generally fixed income for a set amount of time. When you are considering selling those annuity payments from a structured settlement to a company, they are willing to give you a lump sum payment up front and you transfer the rights to them for the monthly payments.

Let’s look at an example of how you can get cash for your structured settlement annuity payments.

If your annuity is for 30 years, which is pretty standard, and for sake of even numbers to work with, lets say it was for $1 million dollars. Your monthly income is probably around $5,000 per month, give or take a little.

When you agree to sell your monthly payments to a company like JG Wentworth or Peachtree, they will pay you a pro-rated amount based upon the remaining time of the annuity. So, if the balance of your annuity is for $500,000 then they might pay you $250,000 cash in a single lump sum payment.

While this might seem like it is less than the value of the annuity, it is. However, you have to remember that the company is in business to make money. They also factor fees and charges into the amount that they will pay you for the balance. It is also not uncommon for there to potentially be legal fees associated if they purchase a structured settlement from you.

Depending upon how your structured settlement was set up, you might need a judges approval to sell the annuity. This could be in cases where the settlement language required court approval, or if the annuity is for a minor child or dependent.

Finding the right company to sell your structured settlement annuity payments too will be easy to accomplish. There is a wealth of companies that are willing to use this as an investment vehicle for themselves while paying you the cash you desperately need. Our sponsors are some of the best and most knowledgeable companies out there!

A fixed annuity structured settlement is funded by an insurance company. The insurance company provides a set income to you in exchange for a lump sum from a third party, if the purchase is from a lawsuit.

The fixed annuity gets its name from the fact that the income is a fixed payment based upon set terms. This means that for the length of the annuity, your income is a guaranteed payment each month, or however you set it up to pay out.

You can also have a fixed annuity that can pay out a lump sum payment during the term of the annuity. This is especially great news if you know you are going to have a large expense at set times during the life of the annuity.

If for example you know you will need a home modification or a new accessible vehicle, you can structure the annuity to pay a lump sum at that time to cover the cost of the expense.

Another reason an annuity is considered a “fixed” annuity is based on its type of investment. By having a fixed annuity, the annuity is based on a secure means of investment, often times a government bond or other steady and safe investment.

Choosing a fixed annuity over a variable annuity is often times the best choice you can make. Especially with the volatility of the stock market, which is what a variable based annuity is funded from, you don’t want to risk your income.

If you are looking to have a steady income for life potentially, then a fixed annuity structured settlement is the most secure option for you to look into. With the tax benefits, guaranteed income and safety of knowing your income is set no matter what, the option is still yours to choose.

The income that is derived from a structured settlement is generally considered to be tax free income to the person that has the injury. This is in order to allow the most compensation to the injured party for their loss.

Whether you set up your annuity with a fixed term and income or a variable income structure, you can often times come out ahead with an annuity because if you were to settle for a lump sum payment, that money could be taxed at one of the highest tax rates that the law will allow. You can learn more about the 4 types of structured settlement annuities and the benefits of each type.

When you are thinking about your annuity based structured settlement benefits, one of the largest considerations that you need to take a look at is your future needs. If you have been permanently disabled, then you will still receive your Social Security and other benefits. However, those payments are not often enough to cover most of the basic needs you might have.

The income from the structured settlement can provide the difference and allow for medical expenses and other financial needs to be fully covered in the future. If you have a need that is 10 years from the settlement date, you can build a lump sum payment into the annuity that will cover that need. A good example might be a handicapped accessible vehicle.

When looking into using an annuity with your structured settlement, you really can’t go wrong. The income is guaranteed for a certain length of time and can often times exceed that period if the person is still alive, thus providing more income than the original settlement amount.

Choosing the right annuity company should be pretty easy to accomplish. With certain laws and regulations that require annuities to be set up in a specific manner, your income should be safe and secure for years to come.

The annuity is tax free money for you and most times they can be set up for payments that can last for a lifetime, even if beyond the guaranteed payments date. For the most part, an annuity is just an agreement between you and an insurance company who will make the payments to you.

There are 2 types of qualities that every annuity has that you need to understand a little better. You can have an annuity that has fixed or variable qualities. A fixed annuity will make set payments based on income generated from government bonds or securities. The variable annuity will make payments that can fluctuate depending upon the current rate of the investment. The variable annuity could be sometime similar to a money market account where the interest rate can fluctuate.

There are also 2 payment types to consider with your annuity. You can have an instant payment option or a deferred option. The instant payments, of course, will begin immediately. The deferred payments will begin at a predestined time or at specific times, such as when the person reaches a certain age, or at the age of the annuity.

With the two different options for both the annuity type and payment type, you could have 4 different options for you to begin setting up your annuity. The most common of these 4 types are the fixed annuity with immediate payments and the deferred payments with a variable annuity. The fixed annuity with immediate payments is the more secure of the two with guaranteed monthly payments of a set amount. The variable type is more risky and is based largely upon the stock market.

One of the largest benefits of the structured settlement annuity is the tax deferred or tax exempt status of the payments. Depending upon how exactly it is structured, you can earn your monthly payments with no taxes being due. This is like receiving more money than your actually getting because you are not paying taxes on the income.

The tax exempt status of the annuity was created with the IRS regulations in 26 U.S.C. 104(a)(2). This law was created to allow accident victims to collect money tax free that is collected from a settlement or judgment that arose from an accident which resulted in bodily injury or other impairments. It was done in order to encourage structured settlements to protect the money that a person can receive instead of getting a lump sum payment that could be blown and spent without consideration of future expenses.

The structured settlement annuity is a great way to have a monthly income that is set for a number of years. You can also transfer or sell your structured annuity payments to other companies for lump sum payments or arrange for a new structure to be set in place.

There are many different options that you can choose from when setting up a structured settlement, hence the term “structured settlement”.  This is by far the most popular option when receiving a judgment or settlement from a lawsuit, auto accident settlement or workers compensation claim.

But, how exactly do the annuity payments work?  What are your options with the structured settlement annuity payments?

First, you need to consider a couple of things about yourself and your current financial condition.  The payments you will receive are usually guaranteed for a certain amount of time.  Most of the time 30 years is the average.  So, you need to consider your age.  If you are older and 30 years will extend beyond your life expectancy, you might want to consider a shorter term or different structure option.

Another consideration is what current and future medical expenses do you anticipate?  Did you know that you can also plan into your structured settlement annuity payments for lump sum payments?  If you know in 10 years you will need a new wheelchair, for example, you can factor a lump sum payment in 10 years that will cover the cost.

Many times the payments that you receive from the structured settlement are going to be a fixed monthly amount.  There can be some variances based upon the exact terms that you put into the annuity, like lump sums, length of terms and beneficiary.

Once the annuity is purchased, your payments will begin.  You can set it up to have the money directly deposited into your account, or you can have a check mailed to you.

Another consideration about the structured settlement payments that you need to think about is the length of term that the payments will be for.  You can make the payments guaranteed income for a set term of years, but sometimes the option is there for them to continue beyond that guaranteed period if the person that is receiving the payments is still alive.

The guaranteed annuity payments are fixed income for the life of the annuity.  There are so many different ways to set up the structured settlement annuity payments that when you are considering this, the possibilities are almost unlimited.