What to Do When You Need to Cash in Your Structured Settlement

If you're the unfortunate victim of an accidental injury or other incident that requires another person to pay, you may find yourself becoming the recipient of a structured settlement. This is becoming a quite common means of setting up payments when another party is required to compensate you for damages.

Instead of receiving a lump sum payment, with a structured settlement, you'll receive periodic payments spread out over time. In fact, based on how the settlement is set up, you might end up getting more money out of the incident by taking a structured settlement rather than receiving a lump sum all at once.

Advantages for Both Sides

The advantages for the injured person are that, quite often, they will require some form of ongoing medical care, at least for a certain period of time. With that being the case, it's often better to have those ongoing, periodic payments coming in to help cover some (or hopefully ALL) of the medical expenses.

On the flip side of the coin, usually the party making these payments will be the other person's insurance company. Since the insurance company can simply purchase an annuity and allow their payment to earn interest, they can use the annuity as a financial vehicle to pay the settlement. You can see why more often than not, a structured settlement turns out to be a good deal for both sides involved.

Possible Disadvantages

However, one hurdle you might face down the road is if you find yourself in a situation where you would be better off receiving the lump sum, or whatever is left to be paid to you by that time. Periodic payments can be a great solution for covering medical costs or other similar bills. But if you decide you want to buy a house, a car or have more expensive purchases coming up soon, it can be frustrating knowing that you "have" the money but you just can't "get to" the money.

A Common Solution

Luckily, your structured settlement can also be sold, either in whole or in part, to a third party. In fact, there are several companies that specialize in purchasing structured settlements and other types of investments as well as settlement brokers who connect buyers and sellers of structured settlements. You can quickly and easily get a lump sum of cash to take care of your financial needs right now by selling some (or all) of your future settlement payments.

However, remember that settlement buyers are purchasing structured settlements as investments. Therefore, once everything is factored in, you will probably get less money than what you would have received if you added up all the payments over time. But it would also take several months, if not years, to receive that amount too and that also assumes that you saved all the money over that period of time. For taking care of immediate cash needs, it might be smart to consider taking "less money now" as long as the amount is reasonable for you.

How to Get Started

The good news is that you can get a quote from most structured settlement companies pretty easily and they typically don't charge for this service. You can find most of the larger companies online where they offer forms for free quotes and additional information about how the process works and what to expect.

Once you find a company that makes you an offer you can work with, they have the experts on hand to take care of all the paperwork and other requirements. They can also advise you through the process, especially since there may be some restrictions depending on the state you live in or the insurance company handling the annuity. But in addition to taking advantage of the experts they have on hand, you should also seek out the advice of a good accountant since there can be some tax implications also.

Structured settlements are a win-win solution for many injury disputes, allowing periodic payments over a period of time. But when situations arise that make it more sensible to receive a lump sum for those payments instead, it's good to know that finding a buyer for your structured settlement is just a few clicks away.