Structured Settlement Funding - The Annuities Point of View

Oct 30
08:23

2009

Michael Buffton

Michael Buffton

  • Share this article on Facebook
  • Share this article on Twitter
  • Share this article on Linkedin

This article explains the difference between structured settlements and lump sum payments. In many lawsuit settlements, the plaintiff is given a choice between these two options, and this article gives background information to aid in this decision and options for selling settlements.

mediaimage

In recent times,Structured Settlement Funding - The Annuities Point of View Articles most cases involving compensation to the plaintiff end up with a structured settlement annuity. Anybody can clearly see the point in opting for an annuity as it has several benefits over a one time cash settlement. Lump sum settlements are only sought after by plaintiffs that have immediate expenses that prove to be a financial burden. Unlike annuities, a lump sum settlement expects much from the paying end as a huge amount in one payment has quite a significant effect on almost anyone. So if you have a legal battle in progress and are wondering what type of settlement to go for i.e. a lump sum settlement or an annuity, then here are some tips that would make your decision a much better one.

First of all, it is necessary to understand that annuities are an option you can chose over lump sum settlements. Instead of receiving all your settlement money in one shot, you may choose to receive it over a period of time. You may request for your settlement to be sent to you monthly or annually depending on your choice. This fact by itself makes the annuities a boon to the plaintiff. In case of a lump sum settlement, the plaintiff is required to make a detailed and thorough financial plan as to where and how his money is spent. There have been several cases where the plaintiff who opted for a lump sum settlement goes on a spending spree with his newly acquired, seemingly inexhaustible bank balance and by no time had spent the money on unnecessary things. But the plaintiff is not required to make an effective financial plan in an annuity as it is designed in such a way that you get your settlement money from time to time depending on your agreement.

Annuities become a steady and guaranteed source of income that is tax free. Usually annuities are set for around a 30 years and the plaintiff who receives the annuity will have an additional assured source of income monthly or yearly based on the choice he makes.

Another aspect of annuities that make them better than lump sum settlements is that you may any day convert your annuity to a lump sum by selling it to funding companies that are always looking out to buy structured settlements.