The Pros and Cons of Selling Your Structured Settlement

Pros and Cons of Selling

Are you thinking about selling your structured settlement but aren’t sure if it’s the right decision?

Selling a structured settlement offers many benefits, but there are also some drawbacks. Should you sell your structured settlement, or should you hang on to it? What do you need to consider beforehand?

Check out this guide to discover the pros and cons of selling your structured settlement.

What is a Structured Settlement?

A structured settlement is a legal arrangement that awards the plaintiff with consistent payments over the course of a certain period of time. This period of time may be a few months, or it may be several years or more.

Many civil lawsuits, especially personal injury lawsuits, never make it to trial because both parties are able to reach an agreement before the litigation process. Typically, a settlement requires the person presenting the lawsuit (the plaintiff) to discontinue any legal action in exchange for monetary payments from the defendant or the defendant’s insurance company.

Typically, the defendant’s insurer funds an annuity policy for the plaintiff. This provides the plaintiff with a steady income stream over the term of the structured settlement.

Pros of Selling a Structured Settlement

While many people choose to hang onto their structured settlement for the length of the annuity plan, others choose to sell their structured settlement for one lump payment.

Here are some of the benefits of selling your structured settlement:

Receive Lump Sum Immediately: Instead of waiting months or years to collect all of your money, you can get a lump sum immediately. If you have a financial emergency, this can be very helpful.

Total Control: Once you receive the lump sum, you’re in total control over how the money gets used. You can put the money toward your savings, paying off a large debt, or making a big purchase.

Not Dependent on Insurance Company: Selling your structured settlement means you no longer have to worry about the stability of the insurance company or clerical errors that can cause issues with your payments.

Cons of Selling a Structured Settlement

Of course, there are downsides to selling a structured settlement that you need to consider. These include:

Losing Money: Perhaps the biggest downside is that you won’t receive the full value of your payments. How much money you lose will depend on the company you sell to, the interest rates, and other factors. Generally speaking though, you can expect to lose between 8 and 20 percent of your total payment.

Wait Times: If you have a financial emergency, think twice about selling your structured settlement, as the wait time for the payment can sometimes be between 20 and 45 days.

Scams: Unfortunately, there are some unethical structured settlement brokers out there, so you’ll need to do your research to find a reputable company. Click here if you’re looking for a reputable structured settlement company.

Selling Your Structured Settlement: Are You Ready to Sell?

Now that you know about the pros and cons of selling your structured settlement, it’s time for you to decide if it’s time to sell. If the answer is yes, then your next step is to begin researching buyers.

And, be sure to check back in with our blog for more financial tips.