How to Puchase Structured Settlements

A morphed secondary market has become more relevant over the last few years, giving investors the ability to cash out their annuities for more than if they sold it back to the insurance company. In recent studies it was determined by the ACLI (American Council of Life Insurers,) that over 1/4 of those individuals receiving annuity payments via a settlement WOULD cash them out if they could.

Typically they are either no longer in need of the extra monthly income and would rather have a lump sum or they feel they can yeild themselves a higher rate of return on their own if they were allowed to manage their own funds.

So the big question is, why do they want to  purchase structured settlements in the first place?

If we take a second to learn what they do with the settlements you will see why exactly they [companies like Peach Tree Settlement Funding] want the settlement advance.

The annuities are packaged together and sold to investors as 'asset backed' securities. Sounds pretty straightforward right? Well not so much, home loans were once considered really secure asset backed securities, meaning Bank A sells the mortgage debt to Bank B (usually the bigger bank) and Bank B earns a percentage over the long term while Bank A gets a small commission after selling the mortgage up to Bank B.

Settlements are similar, the company you sell the annuity to sells it to investors. The original company makes a small commission on the sale and the investor gets the interest on the big pot over the long term. Its a way of combining assets so you can gain more interest.

The down side? The math is extremely complicated and usually the person who wants to 'sell' the settlement is the one who gets the short end of the stick because each time the money gets passed along the value has to remain in tact. Like a used car the dealer you trade it in to can't give you full price because that is what HE will sell it for - and you benefit from no longer having to worry about it.

First off an annuity is basically the free market term for a structured settlement. This is because structured settlements are funded with insurance annuities or the monthly payments from tons of people towards their life insurance policies. So John Doe is paying his life insurance plan and the insurance company simply takes some cream off the top and send the payment down the river to fund someone else's settlement. This is one of the ways a company can afford to pay for a lawsuit, they buy an annuity from the insurance agency, who is receiving consistent income via life insurance payments.

So, if you had a lot of money to invest into your retirement you may want to consider some of the more secure ways of ... well securing your retirement income. You need to buy the rights to something that is more secure than a company, or at least you should. What are the two guarantees in this life, death and taxes. Since you can't buy taxes, at least not in this country, you should buy death, okay not literally but buy life insurance policies in the form of annuities.

Depending on how much you have to invest the annuity can be structured to pay you a fixed amount over a period of time. This allows you to have a steady and predetermined income each month.