In general, if you have a structured settlement or annuity, you should keep it. These two similar financial products come into your life for two totally different reasons. In the case of the annuity, you, an employer, or a loved one has saved up money gradually to serve as income for you after retirement or other time of life. Structured Settlements are awarded to plaintiffs when the opposition decides to settle out of court. Both financial instruments are periodic payouts assigned to lump sums. The money trickles in a few hundred or thousand dollars at a time, but it’s steady income for someone who really needs it.
At least that’s how it’s supposed to function. In certain cases, it’s simply not enough to live on. Some people are in dire straits after a lawsuit. They may be injured, they may be out of work. A small structured payout that comes once a month isn’t enough to make ends meet. It’s not uncommon for people to lose houses during this time in their lives. Annuities usually come into people’s lives during periods of relative calm. But that doesn’t mean that there won’t be a future crisis that makes access to a lump sum necessary
As stated, it’s rarely a good idea to sell your structured settlement. You’ll lose some of the value of it, and state courts don’t allow sale for just any reason. They do however allow the sale if you can demonstrate that you are selling your settlement for a worthy purpose. These purposes should be things that will improve your personal or financial life in measurable ways. They should also continue to benefit you in the long term, not just for a few weeks or months. Here are some examples of great reasons to sell your structured settlement or annuity:
1) To Go Back to School. If you want to get a better education, one which will ensure greater earning potential in the future, this is a great reason to sell your structured settlement. Because you’ll make more money in the long run than the amount that the settlement would eventually provide, state courts see this as a worthy reason to sell.
2) To Pay Off a High Interest Loan. If you have a lot of personal debt, it is easy to use the APR to calculate how much this debt is costing you every year. If you are losing money faster than you can bring it in through your income and structured settlement payments, this is a great reason to opt for a lump sum, in order to turn your financial life around.
3) To Buy a House. Home ownership is a great wealth-creation tool. If you are otherwise unable to buy, selling your structured settlement to get you in the door will usually be deemed a worthy reason.
If you need to learn how to sell a structured settlement, many companies make it easy. It is always best to get several quotes, because no two settlement buying companies are the same. Some will give you better deals than others.