Although anybody would like an extra regular income, which a structured settlement would be, due to the circumstances for which a structured settlement may be awarded, not all recipients of one are envied. For someone to be awarded a structured settlement by a court, it would mean that that person has either suffered an injury or become sick, due to someone else’s actions or, a relative lost their life due to someone else’s actions. In these instances the compensation to be paid to an injured person or to the family of a deceased person, is often large and that is why a court may rule that the compensation be paid by a structured settlement and in doing so, will state how much each payment should be and or how long the payments will be made for. Sometimes these settlements can last for years, even outliving the injured person’s life and if that is the case, the payments would continue to be received by a relative of the once injured person.
Although often referred to as a structured settlement, an annuity is slightly different. An annuity is not awarded by a court but instead could be an arrangement which is made between a saver and their banker in which, in return for their savings, the banker will pay the saver an agreed amount at regular intervals over a given number of years. An annuity is also a way lottery companies will often pay their lottery winners. In the case of larger lottery winners, the agreed period of time that the payments will last, could be the lifetime of the winner. Obviously an annuity recipient is envied by anyone as they may not have had to go through any hardship to still receive an extra, additional income. An annuity winner should remember though that the taxman will look at their annuity payments as just that; an extra source of income and so will tax them accordingly.
If you are in receipt of either a structured settlement or an annuity and you find yourself in a position where you need an extra amount of cash, you can sell your structured settlement payments for a certain number of years and in their place, receive one lump sum. This can be done by approaching a company that specializes in these sorts of transactions and asking them how much they would be prepared to pay for 5 years payments. In the case of a structured settlement which has been ordered by a court to be paid regardless of if the recipient is alive or dead, a company may offer more than they would for an annuity which may suddenly end if the recipient dies. The offers would differ due to the fact that the company would have to take out insurance to cover any losses that they may otherwise have experienced should the seller die prematurely. Either way though, a lump sum for 5 years payments is often appreciated and can be very useful.