A fixed rate structured settlement annuity is often created in connection with the settlement of a personal injury lawsuit. In a typical transaction, the defendant and plaintiff reach a settlement which provides for the plaintiff to receive periodic payments over a period of time.
The use of structured settlements has risen dramatically in the past twenty years. Previously, claimants were presented with the option of an immediate cash settlement, which created significant tax related burdens, and did not always address the long term needs of the plaintiff. Structured settlement growth is most attributable to the favorable federal income tax treatment that such settlements received as a result of the 1982 amendment of the Internal Revenue Code. These amendments approved a structure under which personal injury tort claimants could receive periodic payments over a term of years in settlement of their claim from insurance companies and assignment companies. These amendments confirmed that the personal injury tort plaintiff could receive the periodic payments under a structured settlement on a tax-free basis, including the ability to receive the “inside build-up” value or gain in investment value over the life of the payments. The Internal Revenue Code was also amended by adding new Section 130, which provided substantial tax clarity to insurance companies that establish “qualified” structured settlements and led to the creation of assignment companies that were affiliated with the insurance companies that issued the annuities.
The most significant downside for a plaintiff with a structured settlement comes from its inherent inflexibility. In ways unforeseen at the settlement table, the plaintiff’s financial needs often change over time resulting in a demand for liquidity options. Beginning in the late 1980s, a few small specialty finance companies started meeting post settlement liquidity demands by offering new flexibility for structured settlement payees through a lump sum cash payment to the plaintiff in return for some or all of the rights to the plaintiff’s structured settlement payments. During the late 1980s and early 1990s, certain legal and tax issues surrounding settlement transactions limited the growth of the assigned structured settlement market.
Federal legislation
In 2001, Congress passed H.R. 2884, which was promptly signed into law by the President. This legislation enacted Internal Revenue Code Section 5891 effective July 1, 2002 which largely eliminated the remaining material tax issues associated with the purchase and sale of Structured Settlements. Through a punitive excise tax penalty imposed on the Structured Settlement purchaser, Code Section 5891 created the de facto regulatory paradigm for the industry. To avoid the excise tax penalty, a state court, in accordance with a qualified state statute, must approve all structured settlement transactions. Qualified state statutes call for certain baseline findings, including a requirement that the transfer is in the best interest of the seller taking into account the welfare and support of any dependents. In response, many states enacted statutes regulating structured settlement transfers in accordance with this mandate.
Tuesday, June 30, 2009
Who will Buy Your Structured Settlement?
If you or probably your family is injured in an accident, you may be receiving a structured settlement payment from property or casualty insurer. However, if the payment amount is less than what you are desired, you may contact lot of law firms or financial that willing to buy a structured settlement from people like you with cash money.
If there are companies willing to pay for your structured settlement, don’t think that they are doing it out of kindness or charity purpose. Those companies are buying structured settlements because of the good revenue they can make on it.
What actually happens is, they will buy the offered structured settlement to you, and then they will pay you with a lump sum amount of cash with some fee deducted from it. The lump sum amount they paid you is amount of structured settlement they assume to receive later on. But actually they will received more than that in most cases, that’s why they are willing to buy your structured settlement because of good profit they will gained from it. So, the price of the sold structured settlement isn’t same as the lump sum amount obtained by the person who sold of either their entire settlement or only a part of it.
There are lot of companies around out there are willing to buy a structured settlement from people who want to sell it of course. You probably do not notice it but they are even advertising it on TV as well. These kinds of company are actually making money by purchasing a settlement from people, and receiving continuous payments from the firm or company paying your structured settlement before.
Purchasing a structured settlement is pretty less of work involved. The only difficulties and time consuming is getting a court approval to adhere the laws which enforced by the federal government and prevalent state legislative. Other than that, an effort also goes into marketing side to getting targeted customers.
Non-taxable dealings and an assured safe and sound cash stream are what make buying of structured settlement quiet attractive choice for these companies because you are not required to pay taxes on your own settlement sale and so they are (so they could save some money on taxes at same time). Besides, lot of people needs quick cash and a structured settlement will be a loss for them throughout time. So, they would rather to trade their settlement for lump sum cash for sure. Lets say, you have a payable $300,000 of structured settlement which to be completed in 15 years, these companies could buy it from you for around $200,000 in lump sum cash amount. See that profit?
You must bear in mind that it could be very complicated if you don’t understand what is structured settlement and its process as well. So, it is crucial to take adequate research about them before selling your structured settlement, otherwise you will end up with loosing some good money and time too.
You should pick a several different companies first and compare what their offers to ensure you are not scammed. In addition, do not ever make a deal with company or someone who require a paid up front or so called deposit. Legitimate company normally calculates their fees into their quote; offer to buy your settlement in certain amount inclusive with deduction for their fees. So, good luck guys… see you then.
If there are companies willing to pay for your structured settlement, don’t think that they are doing it out of kindness or charity purpose. Those companies are buying structured settlements because of the good revenue they can make on it.
What actually happens is, they will buy the offered structured settlement to you, and then they will pay you with a lump sum amount of cash with some fee deducted from it. The lump sum amount they paid you is amount of structured settlement they assume to receive later on. But actually they will received more than that in most cases, that’s why they are willing to buy your structured settlement because of good profit they will gained from it. So, the price of the sold structured settlement isn’t same as the lump sum amount obtained by the person who sold of either their entire settlement or only a part of it.
There are lot of companies around out there are willing to buy a structured settlement from people who want to sell it of course. You probably do not notice it but they are even advertising it on TV as well. These kinds of company are actually making money by purchasing a settlement from people, and receiving continuous payments from the firm or company paying your structured settlement before.
Purchasing a structured settlement is pretty less of work involved. The only difficulties and time consuming is getting a court approval to adhere the laws which enforced by the federal government and prevalent state legislative. Other than that, an effort also goes into marketing side to getting targeted customers.
Non-taxable dealings and an assured safe and sound cash stream are what make buying of structured settlement quiet attractive choice for these companies because you are not required to pay taxes on your own settlement sale and so they are (so they could save some money on taxes at same time). Besides, lot of people needs quick cash and a structured settlement will be a loss for them throughout time. So, they would rather to trade their settlement for lump sum cash for sure. Lets say, you have a payable $300,000 of structured settlement which to be completed in 15 years, these companies could buy it from you for around $200,000 in lump sum cash amount. See that profit?
You must bear in mind that it could be very complicated if you don’t understand what is structured settlement and its process as well. So, it is crucial to take adequate research about them before selling your structured settlement, otherwise you will end up with loosing some good money and time too.
You should pick a several different companies first and compare what their offers to ensure you are not scammed. In addition, do not ever make a deal with company or someone who require a paid up front or so called deposit. Legitimate company normally calculates their fees into their quote; offer to buy your settlement in certain amount inclusive with deduction for their fees. So, good luck guys… see you then.
Cash For Personal Injury Settlement
The economy is getting worse every day. Many people are selling their stocks and trading their investments in for less risky options. What is more secure than cash today? You may be wondering how to get cash for a personal injury settlement. Don’t wait for 20 years to pass for your personal injury settlement to finally pay off. You are losing money every day on future payments. Your personal injury settlement is static and locked in to a rate of return that gets lower every day. The future is too risky. If you need cash, get it now. Your future payments lined up are easily turned into lump sums of cash. Don’t wait for cash any longer it is yours. The court awarded it to you for your injury lawsuit. Just think about it, if you have large expenses and are head over heals with debt then get out now. Get cash now for your personal injury structured settlement future payments.
Get cash for your personal injury settlement. Disadvantages are many to holding on to the settlement payment plan you have. You are not getting a high rate of return; you are not able to use it as collateral. $500 – $900 a month payments for the rest of your life does not help you as much as cash now of $40,000- $60,000 that you can get. Why continue to ruin your credit or live a financially stressed life. Get control and freedom back to your life by cashing in now
Get cash for your personal injury settlement. Disadvantages are many to holding on to the settlement payment plan you have. You are not getting a high rate of return; you are not able to use it as collateral. $500 – $900 a month payments for the rest of your life does not help you as much as cash now of $40,000- $60,000 that you can get. Why continue to ruin your credit or live a financially stressed life. Get control and freedom back to your life by cashing in now
Thursday, June 18, 2009
A Look At What Is A Fixed Annuity
What is a Fixed Annuity? An annuity is a contract from an insurance company to pay money in the future. The company guarantees a fixed rate of return, usually based on some underlying bond crediting rate. The contract is between the insurer and the owner of the annuity contract.
Annuities are used to provide a future benefit in the form of a stream of payments. These payments are made within one year, in the case of an Immediate Annuity. They may also take place at some future date, more than a year, as in a Deferred Annuity.
A Fixed Annuity differs from Variable Annuities because the insurer backs the interest rate earned. A Variable Annuity permits the owner to invest the payments in the market for a potentially higher return. This also means that the owner of a Variable Annuity has a substantially higher investment risk. As such, Variable Annuities are registered security products; fixed annuities are not. One fixed annuity, the equity indexed annuity is also not considered a security.
Fixed Annuities have two distinct phases: accumulation and annuitization. During the accumulation or build-up phase, payments are made and grow on a tax-deferred basis. When the owner decides to receive income, the annuity is "annuitize" or paid-out. Payout can take place all at once or over years based on the life of an annuitant. The annuitant is similar to insured in a life insurance policy.
Annuities are often compared to mutual funds and other investment products. This is a mistake because there are stark differences between the two. To start, Fixed Annuities are not investment products. They provide a way to defer income for a period of time. Their guaranty return is unique and not found with mutual funds that face market risk. A Fixed Annuity has mortality and expense charges that are not found in investment products.
An initial payment into an annuity can be made all at once or over a series of period. These are single pay and fixed pay annuities respectively. Annuities enjoy tax advantages during the accumulation phase and should not be used until age 59 and a half. Taking money out prior to that age for purposes other than a special need may result in penalties and fees. Many Fixed Annuity contracts have what are known as surrender charges. A surrender charge is a declining fee, based on the number of years money is held. They can be as high as 30 percent and last up to 20 years.
Fixed Annuities are useful in planning for such life events as retirement. They may also be used to distribute lump sum payments such as inheritances or lawsuits. These are special Fixed Annuities known as structured settlement annuities. A Fixed Annuity gives ease of mind to a person who is uncertain about the market. They tend to be competitive with bank certificates of deposit but again are unique products.
When considering the purchase of a Fixed Annuity contract you should consult a licensed insurance agent or financial adviser. A competent agent or counselor can provide you with comparative information and help determine the appropriate product. A Fixed Annuity may be valuable addition to your product holdings.
Annuities are used to provide a future benefit in the form of a stream of payments. These payments are made within one year, in the case of an Immediate Annuity. They may also take place at some future date, more than a year, as in a Deferred Annuity.
A Fixed Annuity differs from Variable Annuities because the insurer backs the interest rate earned. A Variable Annuity permits the owner to invest the payments in the market for a potentially higher return. This also means that the owner of a Variable Annuity has a substantially higher investment risk. As such, Variable Annuities are registered security products; fixed annuities are not. One fixed annuity, the equity indexed annuity is also not considered a security.
Fixed Annuities have two distinct phases: accumulation and annuitization. During the accumulation or build-up phase, payments are made and grow on a tax-deferred basis. When the owner decides to receive income, the annuity is "annuitize" or paid-out. Payout can take place all at once or over years based on the life of an annuitant. The annuitant is similar to insured in a life insurance policy.
Annuities are often compared to mutual funds and other investment products. This is a mistake because there are stark differences between the two. To start, Fixed Annuities are not investment products. They provide a way to defer income for a period of time. Their guaranty return is unique and not found with mutual funds that face market risk. A Fixed Annuity has mortality and expense charges that are not found in investment products.
An initial payment into an annuity can be made all at once or over a series of period. These are single pay and fixed pay annuities respectively. Annuities enjoy tax advantages during the accumulation phase and should not be used until age 59 and a half. Taking money out prior to that age for purposes other than a special need may result in penalties and fees. Many Fixed Annuity contracts have what are known as surrender charges. A surrender charge is a declining fee, based on the number of years money is held. They can be as high as 30 percent and last up to 20 years.
Fixed Annuities are useful in planning for such life events as retirement. They may also be used to distribute lump sum payments such as inheritances or lawsuits. These are special Fixed Annuities known as structured settlement annuities. A Fixed Annuity gives ease of mind to a person who is uncertain about the market. They tend to be competitive with bank certificates of deposit but again are unique products.
When considering the purchase of a Fixed Annuity contract you should consult a licensed insurance agent or financial adviser. A competent agent or counselor can provide you with comparative information and help determine the appropriate product. A Fixed Annuity may be valuable addition to your product holdings.
Some Facts About Selling Settlements
Before you decide to begin a search for companies that buy structured settlements you should consider what is involved in the process. Often, insurance companies offer a structured settlement rather than an immediate pay out of cash. Under a structured insurance settlement, the insurer promises to pay money in regular installments over a period of time. Typically selling your future structured settlement payments will require a legal process.
The insurance company is ordered by a court to pay you or your family over a period of time. Insurance companies typically fund these awards by purchasing annuities. The annuity therefore belongs to that insurance company and not to you, meaning you cannot sell the annuity. You can however sell the rights to receive future payments You can sell this asset on terms that you negotiate with a third-party buyer, or companies that buy structured settlements.
In most cases selling a settlement will require a court review. Simply put a court ordered the payments and therefore a court will have to rule in favor of selling future payments.
The court's legal review examines the person's financial circumstances, and the arguments in favor of selling future annuity payments. You would have to show that your interests would be better served by an immediate lump sum of cash, compared to the inflexible terms of the existing annuity.
The process will seem impossible throughout and it is advised to find a settlement specialist to help through the process. There are benefits to a lump sum payout and there are advantages to extended payments. The individual should decided what is the best approach to take. Laws may vary state by state so proper research is needed before you make a hasty decision.
Life can throw unexpected surprises at you everyday and your needs may have changed since you were awarded the settlement. The court generally had your best interest in mind when the award was made. You would do well to consider all factors before proceeding with your settlement sale
The insurance company is ordered by a court to pay you or your family over a period of time. Insurance companies typically fund these awards by purchasing annuities. The annuity therefore belongs to that insurance company and not to you, meaning you cannot sell the annuity. You can however sell the rights to receive future payments You can sell this asset on terms that you negotiate with a third-party buyer, or companies that buy structured settlements.
In most cases selling a settlement will require a court review. Simply put a court ordered the payments and therefore a court will have to rule in favor of selling future payments.
The court's legal review examines the person's financial circumstances, and the arguments in favor of selling future annuity payments. You would have to show that your interests would be better served by an immediate lump sum of cash, compared to the inflexible terms of the existing annuity.
The process will seem impossible throughout and it is advised to find a settlement specialist to help through the process. There are benefits to a lump sum payout and there are advantages to extended payments. The individual should decided what is the best approach to take. Laws may vary state by state so proper research is needed before you make a hasty decision.
Life can throw unexpected surprises at you everyday and your needs may have changed since you were awarded the settlement. The court generally had your best interest in mind when the award was made. You would do well to consider all factors before proceeding with your settlement sale
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