Structured settlements is currently a hot topic: instead of receiving monthly payments on a cash settlement, a company offers to buy the structured settlement for a fee allowing the recipient to have access to a lump sum amount. The following is a guest post from a company who purchases structured settlements, explaining some of the terminology.
Annuitant, guaranteed payments, and present values – structured settlement terms can start to sound like a bunch of legalese after awhile. This article breaks down the most common settlement terms and explains them in an everyday way that you can easily understand.
Annuitant: If you are the person receiving or entitled to structured settlement annuity payments – which means a sum of money is paid to you at regular intervals – then you are considered the annuitant.
Guaranteed payments: Thankfully, this term means exactly what it says, or that structured settlement payments made regardless of whether the annuitant is living or deceased.
Insurance settlement: This is your monthly payment made by the insurance company in response to your settled suit. The guidelines stipulated in the insurance policy often don’t meet all the annuitant’s financial goals and obligations, which is why structured settlement owners seek a lump-sum payment.
Court Order: Probably a familiar term to most but very important in understanding how it fits with a structured settlement. This type of legal and binding ruling issued by a judge dictates exactly how you will receive your insurance settlement payments which can come on a monthly basis or perhaps in periodic lump-sum payments (sometimes even both).
Liquidity: If you are seeking a large cash payment by selling all or a portion of your structured settlement, then you are seeking liquidity. Many reasons for settlement owners needing liquidity include a down payment on a home, pay off debt, buy a car or fund an education.
Structured settlement: Think of a structured settlement as a big financial package that can only be opened up or used a little at a time. Unless you seek to sell a piece or all of your settlement, by the court order as explained above, you essentially do not have control over your own money – another good reason why owners choose to sell their structured settlements if they want cash immediately.
1 Comment
Yeah, I agree that it’s nice to know whats available to you and that you have options. Everyone is different, some may do very well with a large lump sum, some may do better receiving it little by little (like a paycheque!).