Selling Structured Settlement: Way To Financial Independence

Selling structured settlement is the settlement between two parties i.e. plaintiff and defendant on the terms as agreed by the parties paid through annual installments or lump sum payment every couple of years. Structured settlement payment has an option of selling all or any part of the settlement in secondary market, for cash, while retaining remaining portion of regular income. A definite regular future installment is financially and emotionally valuable for plaintiff, at the time of injury, when he requires stability.

Process of Settlement: When plaintiff settles a case with large amount of sum, the defendant, attorney of plaintiff and a financial representative will make an agreement of settlement through installments paid over a certain period of time, instead of a huge lump sum amount at one go. It can help plaintiff by stopping him spending the total amount together which can be used later on in proper manner.

Advantages:

There are many benefits of structured settlements like:

• The long payout period of installments help in gaining financial flexibility and stability.

• The convenience of selling structured settlement helps in financial independence and flexibility. The settlement can be sold any time in secondary market, in part or as a whole, in case of need.

• Tax is not charged on structured settlements.

• It is difficult to organize the lump sum amount received at one go. It is always advisable to have money in installments.

• It offers flexibility for emergencies and challenging life situations.

Disadvantages:

The disadvantages of structured settlement are given below:

• The amount and schedule of installments can not be changed after the settlement.

• The companies offering the settlement usually discount the lump sum amount at substantial rate.

• It is not always economically wise to sell structured settlement.

• It is unsuitable for low amount of compensation.

This is the mechanism by which judicial system tries to compensate the victim for the injuries through customized award. The feature of selling structured settlements, in part or as whole, adds value to the benefit of structured settlement. There are certain difficult times in life for which one have to plan and the structure settlement plays an important role in planning for contingencies.

Challenges: Awareness is a challenge in structured settlement and people are not very much aware of the structured settlement process and they do not opt for it. Given the choice between lump sum amount and installment through settlement process, people usually choose lump sum.

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