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The annuity sale market is a multi-trillion dollar market, yet many still go unsold each year. If you’re interested in purchasing structured settlements, then you need to read this guide.
By understanding how the purchasing process works, you can be better prepared. This helps you have a stronger position when negotiating the purchase rate.
Follow this guide, and you’ll be investing in annuities before you know it.
What Is a Structured Settlement?
Structured settlements are a financial tool that comes about after a lawsuit and damages need to be paid. An annuity gets established, then periodic payments are made to the recipient.
This typically happens in a personal injury case. The victim will have experienced an injury or permanent disability. The specific terms of the payout can vary based on what the parties agreed to in the settlement.
Why Would Someone Sell?
Once a structured settlement is agreed upon and formation is finalized, it’s challenging to go back to court and change it. This puts the recipient in a bind when their financial situation changes.
If they sell their right to the structured settlement payments, they receive a lump sum now. This sum will be less than the full value of the annuity.
The buyer of the structured settlement will purchase the full amount of the settlement at a discounted rate.
Advantages of Buying
One significant advantage is the increased interest rate. You’ll find that the percentage rate can be higher than these investment options.
- Short term CD
- 30-year treasury
- Primary market annuities
- Investment-grade corporate bonds
Buying structured settlements is also a more secure investment plan that other investment options such as high yield bonds or equities.
You can also take comfort in knowing that you’re helping people. When you buy their structured settlement, you give them a second chance at financial freedom by giving them a lump sum influx of cash.
Contact a Broker
If you want to start purchasing structured settlements, the first thing you need to do is contact a broker. They can help connect you with people who have a structured settlement they want to sell.
They will be able to negotiate with the seller for you. Know that there are fees associated with this service. These fees will vary based on the value of the settlement you buy and the amount of time involved in the sale.
Check the State Law
While most states allow for the sale of structured settlements, you’ll need to make sure.
The court will need to approve the sale, so you need to show that the sale is in the recipient’s best interest.
Start Purchasing Structured Settlements
Many people use purchasing structured settlements as a method of investing. By purchasing structured settlements, you could create a passive income stream that generates cash flow after you retire.
These annuities have a better percentage rate than other annuities on the market.
Check out the Business/Finance section of our blog for more helpful money related articles like this one.