"Types of Structured Settlements"
Structured settlements have been utilized in the United States as an alternative to lump sum cash payments for more than 30 years. Essentially, structured settlements are a financial arrangement used to compensate individuals who have been injured due to the negligence of another person or organization.
Oftentimes, structured settlements are used when an individual is awarded a large sum of money. Instead of paying one large payment, smaller payments are made over a period of time. These payments may be issued monthly, quarterly, semi-annually or annually.
Structured settlements are usually backed by an annuity, which is similar to Certificates of Deposit (CDs) sold by banks. Annuities are invested and thereby help to expand the individual's financial portfolio. Structured settlement payments are tax-free; however, investment proceeds are subject to both state and federal taxation.
There are different types of structured settlements; each designed to suit the individual's financial needs. Some are paid over a certain period of time, while others are paid for the remainder of the recipient's life.
Structured settlements paid over a period of time are known as "Designated Period" or "Period Certain Annuities." With this arrangement, the recipient receives a set amount of money at a specific time (monthly, annually, etc.) for a set number of years. Should the recipient die before the structured settlement is fully paid, the remainder is paid to the designated beneficiary.
Another type of annuity is the Life Annuity. In some cases structured settlement payments are paid for the lifetime of the recipient. However, in other cases "life" may actually refer to a certain number of years based on the recipient's life expectancy. Also referred to as "Period Certain," this type of annuity will transfer to the beneficiary if the recipient dies prior to the designated number of years.
Lump Sum annuities allow recipient's to receive a lump sum payment at a future date. Many people who have children choose the lump sum structured settlement, as it allows them access to college funding. There are two types of lump sum annuities -- "Lump Sum" and "Life Contingent Lump Sum." The first allows transfer of the annuity to a designated beneficiary, while the second does not.
Life Annuities are structured settlements that pay monthly payments for life. There are two types of life annuities -- "Life Only" and "Joint and Survivor." Life Only offers no beneficiary provision, whereas Joint and Survivor continues payments to the beneficiary for the remainder of their life.
Last, but least, is the Temporary Life Annuity. This type of structured settlement pays regular payments for a specific number of years. The annuity ends when the recipient dies, as there is no beneficiary provision.
Structured settlements can provide financial security for a long period of time. The main drawback is once the papers are signed, there is no way to change structure of the settlement. If unexpected expenses occur, money cannot be withdrawn from the account.
When emergency funds are needed, a solution is to sell all or part of the structured settlement to a note buyer such as Simon Volkov. Selling structured settlement payments for a lump sum of cash is a quick and easy way to obtain the money you need.
If you are interested in selling structured settlement payments, Simon Volkov would like to talk with you. We are a distinguished leader in the financial industry and have helped hundreds of individual's through the process of selling financial notes.
There is no fee to speak with our highly trained professional consultants. To get started, fill out the requested information via our secure Structured Settlements form.
Upon receipt of your information, one of our consultants will contact you within 48 hours. Your information is held in the strictest confidence and we never share it with others. We look forward to speaking with you and helping you with your financial decisions.
Published on March 28, 2008 at 07:54 PM
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