Selling a Structured Settlement for Lump Sum Cash
Is it worth it to sell your structured settlement? While selling your structured settlement might be a convenient way to get your hands on some quick cash, you may want to research some of the advantages and disadvantages of selling it.
If you are currently receiving regular payments from a structured settlement, you may be able to trade in a portion of your future payments or all of them for a lump sum. Let’s delve into what structured settlements are to give you a better idea of whether you should sell or keep your structured settlement.
Steps To Selling Your Structured Settlement
Understanding the steps involved in selling your structured settlement can help you make informed, confident financial decisions.
Request a Quote
Pick an Option
Complete the Paperwork
Optional Cash Advance
Court Review
Receive Your Funds
What Options Are Available When Selling Your Structured Settlement?
There are two options available to you when you are selling a structured settlement. First, there is what is known as a full buyout. Secondly, there is what is known as a partial buyout. Let’s delve into the details of what each of them contains.
Full Buyout
When selling a structured settlement, a full buyout is the most common option for sellers. A full buyout can be best described as selling the annuity in its entirety all at once. In cases when full buyouts occur, people generally want a lump sum paid out as soon as their compensation is agreed upon. However, insurance companies generally do not offer to pay out the entire amount of the settlement all at one time. Therefore, people that want their money as soon as possible will look to sell their structured settlements to companies willing to buy them.
Generally, when people decide to opt for a full buyout, they want the money up front because they want to invest the lump some in something that will generate more profit, such as a lucrative investment. This will generally accepted by a judge in court. Remember: a judge must grant you approval in a court in order to sell your structured settlement annuity.
Another reason why people may decide on a full buyout may be when they have unexpected expenses that they are unable to afford such as purchasing a home, medical costs, college education, debts, etc. These types of situations can also be approved by a judge in court because they can improve the policyholder’s quality of life and are viewed as legitimate reasons for selling.
Partial Buyout
Partial buyouts are exactly what they sound like. They are the best option when the person selling them only needs a small amount of money for immediate needs. With partial buyouts, only a specific percentage of the annuity would be available for sale instead of the entire amount of the structured settlement.
One advantage of partial buyouts for sellers is that they get to retain some of the future payments they receive on a monthly or annual basis, rather than selling them in their entirety, as is the case with a full buyout. Partial buyouts are generally recommended if you do not want to sell the entire annuity. Be aware that buyers of structured settlements will always pay considerably less than what the policy is worth because they want to make it profitable for them. Buyers are not charitable and always look to profit from these types of transactions.
When giving a reason to a judge for selling your structured settlement in a partial buyout, judges are more lenient because the reasons for partial buyouts are normally what are considered acceptable by the court such as recent job loss, home repairs, auto repairs, healthcare expenses, etc.
Ultimately, when you decide if you want to sell your structured settlement annuity, be sure to consider the two selling options that are available to you: full and partial buyouts. Consider the advantages and disadvantages in order to make a well informed decision.