Annuity Lump Sum Payment
An annuity lump sum payment is often sought by the annuity holder when the monthly payments that arrive are not enough to pay bills, make a large purchase or other desired action. An annuity may exist as the result of a personal insurance purchase especially made for retirement income or it may be the result of a tort judgment from a personal injury lawsuit or could be the winnings from a lottery. In any case, the desire of an annuity lump sum payment comes from someone who wants one large "cache of cash" rather than the trickle of monthly income. There are certainly providers ready and anxious to help the annuity holder to accomplish those wishes. Picking a provider may be one of the hardest tasks in this process.
Over the past ten years or so, commercials running on the large cable TV superstations have touted their lump sum services noisily and often. There are two main points these commercials make: This is my money, and I'd like to have it now, thank you very much. Often these commercials picture a person shaking his head in disgust over that monthly stipend that comes from the mailbox and then cuts to pictures of a new house, boat, car or other luxury item. The announcer then declares that those things can be a reality if only one will turn that annuity or structured settlement into cash now. An annuity lump sum payment appears to be the answer to life's great needs or wants. But there are surgeries that need to be performed, rooms that needed to be added on for Grandma's permanent stay, a "Hoopty" (clunker car) that cries out to be replaced and perhaps education that requires funding, so there are some very legitimate needs that require a provider's services.
If a person received an annuity or pension from a tort judgment, it was meant to provide long term income that could not be received because of personal injury. Typically, the insurance company of the defendant in a civil case is ordered to pay a lump sum of money to the injured plaintiff, sometime resulting in millions of dollars. But instead of hurting its bottom line, the insurance company will buy a pension for the judgment amount that will provide monthly income, often for a lifetime. But often the award is not nearly that much, and the monthly allowance check only amounts to a few hundred dollars albeit for perhaps thirty years, but seemingly not enough to make a lot of difference in the budget for many persons. Then the desire for an annuity lump sum payment begins to grow and action is usually taken.
Americans live in the most hedonistic country on earth, ever desiring the newest and the best and the shiniest and most gleaming. And so in some cases, that trickle of pension money coming in that could be invested quite nicely becomes almost a source of irritation because it's a reminder that this existing financial agreement doesn't provide nearly what an annuity lump sum payment could give in the way of acquiring shiny, new, chrome infested stuff. Some of the most insightful financial experts in the country suggest that a person seek some financial and personal counseling to hash out motives and reasons for being desirous of an annuity lump sum payment instead of accepting a steady trickle of income. Because of the potential of losing so much money in the sale of a structured settlement, such counsel and advice is clearly not out of the realm of reality. The troubles of life always make us want to get away from it all, but there is help. "Fearfulness and trembling are come upon me and horror hath overwhelmed me and I said, Oh that I had wings like a dove for then I would fly away and be at rest. Cast thy burden upon the Lord and he shall sustain thee: he shall never suffer the righteous to be moved." (Psalm 55:5-6;22)
The bottom line of acquiring an annuity lump sum payment from a buyer of structured settlements is a very big loss in the value of the structured settlement. The buyer must assume some very large risks including the possibility of annuity companies going belly-up. That does occur that at times, and if it happens the buyer is out of luck. But there is even a greater risk the buyer is taking, and that is the uncertainty of the future. An annuity is often stretched out over ten to thirty years or more. The buyer is taking a huge risk that everything will be as it is at the time of the purchase in financial terms. Inflation will be the same, the stock market will be the same, the value of the dollar will be steady and few if a recession will occur. Taking big risks mean taking big earnings, and the buyer of structured settlements will typically demand between forty and sixty percent of the value of the annuity.
The price of selling a structured settlement is enormous. And finding a buyer who is ethical and client oriented may be time consuming. There are a number of online companies ready to provide their services, but finding one that has the best interest of the seller may prove a daunting task. All buyers providing an annuity lump sum payment will ask for a large sum of the annuity's value so the difference will be in customer service. Make sure that references are checked as well as the company's record with the Better Business Bureau. Find out from the BBB how complaints against the company were handled.
Annuity For Legal Structured SettlementsAnnuity structured settlements are given to people who win a court ordered payment, as in an injury suit, or a class action suit. An annuity for legal structured settlements provides the receiver with a certain amount of money each year/month for a set number of years or for a lifetime. This type of arrangement is often used when the money is of a larger sum than a company, person or organization can provide in one lump sum. Lottery winners are also issued this type of payment arrangement. Before agreeing to any terms, a receiver should be informed of the legal ramifications because they can get quite complicated. Many attorneys will rely on experts who routinely handle this type of payment. Typically, the expert is a broker that is familiar with working with many different companies that provide structures. The broker will gather information about the receiver, their medical history and bills (if applicable), lost wages, ability to return to work, expenses, and other information pertaining to the specific case filed.
The broker, while working closely with the attorney, will come up with tailored annuity structured settlements that best suit the needs of the receiver. The obligation to make the payments is then set up through a through a third party. The structure can be set up to benefit the receiver within a certain situation, and can change throughout the life of the settlement. The annuity for legal structured settlements can be made for higher payments in the beginning, while a person is out of work, for example, then the payments can decrease as the receiver is able to return to their place of employment. The payments can also be set up to pay certain bills off first, before monetary funds are released to the receiver for free use. An example of this would certainly be valid in a personal injury suit, where the majority of the funds would be sent in to pay for overdue and unpaid hospital bills. Next would be loss of wages, then payments for pain and suffering would be released.
Some questions to ask during the process of distribution for annuity for legal structured settlements are: Have there been other clients that the broker arranged payments for? What are the advantages and disadvantages of the different types of payment arrangements? Is a stretching out the payments better than a lump sum payment? Once these questions have been satisfactorily answered, the receiver can feel confident that their annuity structured settlements are in the hands of experienced professionals who are looking out for their best interests. An example of how one arrangement might work follows: A man is 25 years old, when an accident occurs. He cannot work and will need $2000 per month with an annual 3% increase for cost of living, and the ongoing payment of his medical expenses which will cost $1500 per month for 5 years. The man would also like to receive an additional $500 per month for the remainder of his life. There are currently $36,000 in medical bills, and $275,000 in lawyer fees. He would also like an immediate cash distribution of $31,000 in one lump sum.
For future needs of the man from ages 25-45 with regards to salary, the guarantee payout should be $644k. This includes the monthly salary with the annual 35 increase. Then for the rest of his life, depending on how long he lives, will cost the insurance company a total of up to $2.3 million dollars. The ongoing monthly medical expenses will cost the insurance company about $90k, plus the additional $500 monthly payment for life will cost about $390k. The current obligations will be the $36k in medical bills, the $275k in fees for lawyers, and the $31k in immediate cash distribution. Annuity structured settlements that are set up this way will cost the insurance company $3.6 million in cash, and another $1.1 million in fees, interest, and costs associated with the payout. An annuity for legal structured settlements claim can really cost the payer a tremendous amount of money just i additional charges, but it may be the only way a company can pay if they do not have the $3.6 million in cash to pay in one lump sum.
Most minor injury cases bypass annuity structured settlements and pay out in one lump sum. More serious injuries, especially those that render a person disabled for life typically require an annuity for legal structured settlements in order to be sure the victim in the situation is properly taken care of, since through no fault of their own, they are rendered incapable of working to support their own families. Structured settlements are becoming more and more popular because they are in the form of an annuity, which is sold by a third party, usually an insurance company. At times, they may be invested in U.S. Treasury securities, and it grows the money needed, instead of the company paying all of the money and is completely tax free at the state and federal levels. Receivers should research all of their options before accepting any terms on payment distribution. "When thou vowest a vow unto God, defer not to pay it; for he hath no pleasure in fools: pay that which thou has vowed." (Ecclesiastes 5:4-5)