The words annuity and structured settlement are at times used interchangeably. A structured settlement is an outlined set of payments granted to the client of a lawsuit in the form of a single premium immediate annuity (SPIA). Recognizing the concept of the time value of money should help clear any doubts as to why you would get less money than your insurance plan is scheduled to pay out if you decide to exchange your structured settlement or annuity. The present value is the current worth of a future amount of money or stream of cash flows given in a lump sum after being discounted at a precise rate. Future cash flows are discounted based on the schedule they are due to be paid out and whichever rate is being incurred for the transfer. A payment of $100,000 due in 2 years is invariably going to be worth more than that same $100,000 lump sum due in 20 years supposing the exact same discount rate is employed in both examples. It's a simple concept really. The lengthier time it will take for an investor to recoup his or her investment, the less that future payment will be worth at this moment.
Discount Rates Put on Annuity & Structured Settlement Transfers: Any person that is considering getting cash for a structured settlement annuity should know what discount rate the factoring company is using. For example (as of the time of this article) if you have a $200,000 payment due on January 1, 2015 which you'd like to cash in you'd receive $89,763.55 using a 19% discount rate. Nonetheless, that same lump sum due on precisely the same date having a 15% discount rate would net you $105,072.08. Variances in the discount rate will have a huge influence on what you could be given in a lump sum. In this example just a 4% variance meant $15,308.53! For that reason know your discount rate before you receive cash for your structured settlement or annuity, and be sure to browse for the lowest rate.
Utilize a Present Value Calculator to Assess the Value of Your Annuity or Structured Settlement: You may want to use a present-value calculator to find what your lump-sum payout would be at a variety of discount rates. For structured settlement annuity transfers, rates can be anywhere from 10-25% so it's good to check around. You'll find quite a few places that invest in annuity payments, however several of them impose extremely high discount rates. Get the highest offer you can before deciding to cash in. You probably ought to consult with a legal professional and/or financial consultant before signing any contract just to be sure that you're absolutely aware of the provisions of the transfer.
Time it Takes to Complete Structured Settlement Annuity Transfer: Structured Settlement Annuity transfers take around 2 months to complete. In essence the process is: customer accepts the offer for his or her structured settlement annuity payments, client executes the contract, lawyer files the petition for the approval of transfer of structured settlement payment rights, court hearing is scheduled, court hearing takes place, and the client is funded with a lump sum assuming the judge approves the transaction. A handful of states may be speedier than others but the entire process is precisely the same no matter what structured settlement factoring company you choose. Single premium immediate annuities that are not a result of a lawsuit generally don't have to seek court approval. Normally these transactions can be achieved in as little as a couple of weeks. Typically these annuities were purchased as an investment or inherited. The annuitant may choose to assign their policy at some period and opt for a lump sum. The amount of money offered may well be a little more than with structured settlement annuities given that there are typically no legal fees or legal work connected with the exchange.
If you have any questions with regards to the structured settlement annuity transfer process or prefer to obtain an offer on your annuity or structured settlement, please visit our streamlined structured settlement annuity quote page. Reach our sales office at 1 (888) 852-5658 and ask to speak with Mary Michaels. She is our foremost structured settlement transfer broker.
Excellent post. Thanks for sharing a great and useful information among the users about Interest Rate or Discounted Rate When Selling Your Structured Settlement Annuity. I had bit less knowledge over this topic but after reading your post, I got great learning. Do such a more post, So we get great learning. Thanks once again.
ReplyDelete_______________________________________
settlement buyers