Seven Reasons to Keep Your Structured Settlement

A Guide to everything you should know about selling.

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Chapter 1

Structured settlement annuities offer security, peace of mind and value

If you have structured settlement annuities then Strategic Capital is there for you. We want to make sure that you only sell your structured settlement payments when it is truly in your best interest. Thus, we must come right out and say that while selling can certainly be a life saver in certain situations, these settlements are truly good financial tools and you should keep your settlement if you can. You wonder, is a structured settlement good or bad? They are good.

In fact, here are seven reasons that you should consider keeping your structured settlement annuities, or at least only selling as few payments as you must to get the job done:

Reason #1

to Keep Your Settlement is that you may need the payments in the future – payments provide financial security, allowing you to pay your rent and utilities, buy groceries and more. They offer security.

Ask yourself

“If I get a cash payout on structured settlement payments will I be able to live?”

Reason #2

to Keep Your Settlement is that you may want to sell your settlement in the future, when you have even more money trouble or a bigger need. Sure, you can sell more payments later, but only if you have more to sell.

If you sell too many payments now for something relatively trivial, say to purchase a new car, what will you do later when your house needs a roof, you can’t afford medical care, or some other more serious need arises?

Reason #3

to Keep Your Settlement is that you may have other sources of money available to you. Be sure to exhaust your options before you sell your settlement. Perhaps you can get a low interest loan from a family member. Or sell off a large item, like an old diamond ring or your classic car.

But you still say,

“I want to sell my structured settlement”.

Just remember, selling your settlement should be a last resort. In addition, remember that selling a settlement takes time – there may be faster ways to get the money that you need.

Reason #4

to Keep Your Settlement is that you may regret selling structured settlement annuities later. Tommy received a structured settlement when he was 19 for a car accident. When he was 22 he sold his payments to put a down payment on a house and buy a new car. But the car has 150,000 miles on it now and is junk; the neighborhood went down and his house has little value. Now, Tommy is 28, married and wants to move to a better neighborhood because his wife is pregnant. Yet, Tommy simply cannot get out of his house because he owes too much and is worried about how he will afford a third mouth to feed. Tommy desperately wishes that he hadn’t sold his payments so soon – he could sure use that money now, more than he needed it before. Don’t let this happen to you.

Reason #5

to Keep Your Settlement is if your payments extend too far into the future. This has to do with what is called the “time value of money”. This means that money is worth more today than it will be in the future – it’s due to inflation.

Imagine it, ten years ago a movie theater ticket cost about 40% less than it does now. Ten years ago think about what you could have bought with a dollar compared to today. Now, imagine that you put a dollar in a time capsule today and then opened it in ten years – how much do you think you could buy with that dollar today compared to ten years from now? A lot less.

This means that your payment will buy less in the future than it will now. So, if a company offers you a cash payout on structured settlement payments they will pay less for payments that extend further into the future, knowing that those payments will have less buying power. So selling payments that extend too far into the future is often a poor financial move as they will be heavily discounted, more so than simple inflation can account for. Like taking a cash advance on your credit card, you simply push your financial problems into the future, at a high cost.

Reason #6

to Keep Your Settlement is if you are not good at managing money. Let’s say that you want to pay off your credit cards. That’s a noble goal, but selling your settlement to do that is only a good idea if you actually stop using your credit cards and manage your money better in the future.

Reason #7

to Keep Your Settlement is if selling it will not solve your problem. That is to say, if you need $48,000 to pay off your credit cards and buy a new roof but selling your payments will only net you $24,000 then it is probably not a good choice to sell as it will not solve your problem.

Keep your settlement, if possible!

Do not sell your structured settlement if you can help it. If you must sell, sell only as many payments as you absolutely have to.

Take Your Time and Think it through

According to Terry Taylor, former president of the National Structured Settlement Trade Association (NSSTA) and a man who was instrumental in setting both federal and state law related to structured settlements, one of the biggest pitfalls that those seeking to sell their structured settlement annuities get into is falling prey to “fast talking sale people” who pressure the person to sign the contract without properly thinking the situation through. Terry goes on to say that among the worst reasons for a person to sell a settlement is because they saw an advertisement on television, or they simply want to buy something fun or have some extra money in their pocket. Before you sell an annuity at a loss think the matter through carefully and talk to Strategic Capital.