Should You Take Cash for Your Annuity?

If you've been injured due to the negligence of another party, you may be entitled to a settlement. If that settlement comes in the form of a structured settlement annuity, you may decide you want a lump sum instead. You may be wondering if trading your structured settlement payments for a lump sum payment is the right thing for you. It really does depend on your individual circumstances and financial needs. There are benefits as well as drawbacks for buyers and sellers of structured settlement annuities.

Let's say you have medical bills that are ongoing in nature. In this case, a structured settlement might be best for you. A structured settlement will help ensure that you always have a steady stream of income to take care of these expenses. In contrast, if you were to take the money in a lump sum payment you could find yourself out of money if the funds were mismanaged. On the other hand, you could end up with even more money if you invested your lump sum payment in the right way.

Looking at things through the eyes of an annuity buyer, you'll see that a small investment up front can lead to potentially large long-term benefits. All in all, accepting one large sum of cash for a structured settlement annuity seems like the best thing for all parties involved. In many cases, this is true. The important thing is that you understand exactly what you are entitled to. Once you sell your structured settlement annuity, you get the lump sum agreed upon and that's it. The remainder of your annuity is of course forfeited to the buyer.

So, how do you know if selling your annuity is right for you? There are many things to consider. First, think about how old your annuity is. If you've got a long period of time ahead of you, such as 20 years, you probably won't find an investor willing to wait that long. Another consideration is your reasons for wanting the lump sum payment. Do you have a real need for the money or are you just being greedy? Are you willing to give up a portion of your total settlement just for a lump sum payment? If so, how much? These questions and more should be carefully considered before making any decisions.

If you think that selling your annuity is the right thing for you, consult with a trusted and experienced professional. After learning as much as you can and having all your questions answered, you will be in a better position to decide whether or not selling your structured settlement annuity for one lump sum payment is the right thing for you.

Copyright 2007 Jim Sterling - All Rights Reserved

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