Structured Settlement Annuities 101 – The Basics

What Is A Structured Settlement?

By basic definition, a structured settlement is an arrangement for periodic payments, usually a specific number, to be paid on a regular basis, normally monthly, quarterly or annually, over a period of years in order to satisfy a financial obligation. The term usually applies to restitution for damages that result from personal injury lawsuits. In most cases, this is a personal injury caused by negligence, such as a motor vehicle accident, medical malpractice, wrongful death, or injury caused due to the negligence or liability of a property owner.

Instead of paying the full balance due to the claimant at once, the settlement is structured accordingly and utilized as a way for the responsible party to 1) meet their large financial obligation to the claimant and 2) also meet the needs of the claimant.  A larger settlement amount is agreed upon because a payment schedule is established instead of a lump sum payment.

Options for Structured Settlement Annuity Recipients

The regulations regarding structured settlements vary by state. People receiving payments of this kind usually have a number of options available to them.  After payments begin recipients have the option to sell all or a portion of their structured settlement payments to a third-party funder, such as a structured settlement company, in order to access cash in a lump sum.

For those interested in selling structured settlement annuity payment rights, there are a number of options to be explored.

Option #1: A partial sale, the most common type of sale, is where the seller sells just the number of payments to help him or her get access to the amount of cash that he/she needs immediately (within several weeks based on court approval). The agreed upon payments are re-assigned to the buyer of the structured settlement, and in exchange, the buyer gives the seller an upfront lump sum of cash. This still leaves the seller of the structured settlement payments with additional monthly payments they will receive.

Option #2:  A full sale is when all future payments are exchanged and reassigned to a buyer.  The seller gets a larger lump sum payout, but will receive no future payments. This is commonly known as a “cash for structured settlement” deal.

Why People Choose to Sell Their Structured Settlement Payments

Structured settlement buyers have reported that the most common reasons people want to sell their payments is to; satisfy overwhelming debts, pay unexpected expenses, or to resolve a financial emergency they’ve been faced with. Such as:

• Medical bills
• Difficulty meeting mortgage/housing payments
• Divorce
• Foreclosure
• College tuition

These are just some of the reasons people want to sell their structured settlement payments. Some people will sell their structured settlement simply because they like the idea of having access to their cash and having it in their control.  This is an option that is not always available at the time a settlement is originally constructed. Other people may choose to have their money available and at their disposal now because they feel that their payments may outlive them.

Secondary Market Structured Settlement Annuities

When an original structured settlement annuity is sold, either partially or in full, it then becomes known as a Secondary Market Structured Settlement Annuity.  MJ Settlements offers their investors the safety and guarantee of high yield Secondary Market Structured Settlement Annuity.  Please see our Available Offerings page for a list of the deals we currently have available for purchase.  Contact us to find out more about today’s offerings.