Structured insurance settlements didn’t come to the United States until the 1970s as allowable option instead of the lump sum payment. Some financial advisors prefer their clients get structured payments because the client will receive payments long after the pain that caused the settlement has passed. The insurance companies prefer the structured settlements because it’s not a large of a hit to their cash flow and it balances out their risk over a longer period of time. I personally hate the structured settlements and think you should sell structured settlement payments as soon as possible. If the judge forces one make sure the payment is assigned to a third party or an annuity because you don’t want to have to depend on the defendant to keep making the payments.
Why the Structured Payment Sucks
The structured payment is horrible because a judge and lawyers determine what the worth of your money is not you. Many times they’ll argue the value of the money is inflation or the payback on a treasury bill. However, if you have a mortgage or high interest credit card debt at 24% your personal ability to earn more money with the lump sum would have made a much larger impact in your life. Even if you have no debts you may have a business idea or understand some investing basics. Again if your business or investments earn 8% – 12% per year you could be multiples richer over the life of your payments. The last reason structured payments are horrible is they make most people worse with their money and job habits because they know the next check is coming.
Sell The Payments
Good thing for you it is completely legal to sell the payments to someone else for a lump sum of money. There are lots of structured settlement brokers who will be happy to discuss options with you. Feel free to call around and negotiate, this is your money and they want to buy the contract from you. If you need help with the math hire a financial advisor to review each offer with you. Often the terms can be complex, and you’ll need someone with experience in the area to decipher the terms into common sense. You’ll need to be open with your financial advisor so they can understand how you intend on using the money so they can pick the terms that work best for you.
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How to Prepare for My Purchase Structured Settlement
Posted by singular on April 24, 2010 0 comments
Going through an injury is a trying time. You are attempting to follow doctor’s orders that usually never match with what work expects you to be able to do. Your family still wants your help and you just want to close your eyes and have things go back to normal. On top of it all you’ve had to fight the insurance companies to get a fair settlement. Now that you’ve won there are some things you’ll need to do to prepare your life for the payments that will be coming.
Find Something to Do
Getting a structure settlement in way replaces the world that was your job. If you are no longer able to do the job you used to prior to the injury you’re going to feel like a different person. The longer you wait to find a new direction in life the harder it will be. Routine monthly payments have a way of making people limited to the amount of income their settlement brings in. This was never meant to be your top potential. If it has already become limiting in your life consider going to a structured settlement company and just selling away your payments. That way you’ll have a pile of cash to change your future with.
Decide How the Money Will Work For You
Since you’ve decided you will not be limited to your monthly stipend you now need to decide how this money will bless your life. One choice is to simply give it away every month. This is often rewarding in two ways. One you get to help your favorite charities. The other way is you now get to feel your injury did good for the world. Instead of a check that reminds you of your pain, you get a check that you’ll be excited to help someone with. Another choice is to invest it for the future. By investing your income will become true wealth that can have generational impacts. If you’re young you might not have thought about this much, but as an older person it means to world to know what you’ve built in this world could help your family for generations to come. The last choice may simply be that this is your family’s play money. Maybe it’s vacations one month or fancy dinners the next. If immediate joy is what you need that is OK too because by spending it all on fun you still have to go out and live in the world.
Be Prepared for Problems
Most good lawyers will insist that the structured settlement is handled by a third party where the offending party simply pays a large firm to buy an annuity to cover the monthly payments of your settlement. Sometimes large corporations get to keep their own annuities in house. This can be problematic for you in the future when payments simply start getting lost or not processed at all. The offending company doesn’t have much interest in paying you on time or being friendly with your questions. Often they will be incredibly rude hoping you’ll leave them alone. Just keep your lawyer handy and never correspond with them on your own. If there are problems attack viscously with the law so they think twice before messing with you again.
Act Normal for the Family
You still need to teach the normal lessons of life to your kids. They need to learn how to handle their finances in the real world when they grow up. If all they ever see is a monthly payment that magically arrives they will have a harder time linking how money is really earned and used.
Pay off debt and watch your cash reserve grow
Posted by singular on March 22, 2010 0 comments
If you are in debt, seldom will you be able to save for your rainy day unless you have some extra cash at your disposal. So, the first step is to pay off debt to reduce your debt obligations. This will allow you to free up some cash that you pay to meet your financial obligations.
How will you pay off debt and reduce your debt obligations?
There are different possible ways in which you can easily do so. Some of the best ways are mentioned below –
• Manage debts on your own
You can manage debts on your own. How will you do this? First of all you need to identify the cause that has landed you in this situation. In majority of the cases it is cash mismanagement. But it may be due to unforeseen financial emergency too. In order to meet the unexpected financial events, you need to build up an emergency fund, which you can fall back upon in case of financial hardship. Use cash instead of plastic money, budget your finance etc.
• Enroll in a debt help program
There are many debt help programs available and you can opt for one. Depending on your special financial requirement, you can enroll in debt consolidation, debt settlement or debt management. However, if you enroll, make sure you take the program to completion.
• Seek assistance of a credit counselor
A credit counselor can be of immense help. You can seek assistance if you sense a financial crisis in near future or you are exploring ways to get out of debt. The credit counselor will assess your financial situation and suggest a method that will help you to pay off debt.
• File bankruptcy to pay off debt
If nothing seems to work for you, you can file bankruptcy. It can be either Chapter 7 or Chapter 13 bankruptcy. However, it is important that you seek assistance of a bankruptcy attorney as it is a federal court process and there are many legal aspects that need to be addressed.
It is a wise move to get rid of your debts so that you can save cash to build up your emergency fund because you never know what will happen tomorrow. Your cash reserves will always give you a strange support in every possible situation, whether it will be good or bad, would happen to you or your family. So, go ahead and take control of your finances.