Before selling your annuity or structured settlement, it is important to determine the strength of the offer based on the company’s history, ratings, and quality of proposal. Within this week’s blog post concerning your financial health, we are going to discuss the ins and outs of annuities and structured settlements so that you can ask the right questions and produce the best results.
What are you dealing with?
While you’re probably aware if you have either an annuity or structured settlement, it is important to know the difference and how that might affect your long-term payout and buyer. An annuity is generally a financial tool used by insurance companies or investment firms. Lottery winnings often fall into this category as well if the individual opted for the yearly amount paid over 20 years as opposed to the lump sum. An annuity can earn a return in addition to the original amount and can also have more than one beneficiary. A structured settlement, on the other hand, tend to be the result of a lawsuit. Instead of a plaintiff receiving a lump sum from the defendant, the settlement amount is converted into a series of payments over time. These are called deferred payments.
Who is in the Market for Structured Settlements?
Determining the proper buyer for your structured settlement payments or the right to your future annuity can be a daunting process. While there are many options, a business called a factoring company is likely to be interested in buying it for a lump sum of cash. Individual investors are also an option due to the competitive nature of the industry. These two groups, the factoring companies and individual investors, make up the secondary market which is highly regulated so your money is in good hands. Before determining which group to go with, you should consider not only the quote being offered, but also the customer service ratings and track record of a company.
Now that you have successfully completed your google search and discovered countless buyers for your annuity or structured settlement, it is important to keep a few factors in mind.
A good company or private investor will:
- Make a competitive offer
- Provide a number of options for an immediate cash advance
- Provide a clear timeline of when you will receive your money
- Have the proper licensing and follow appropriate regulations
- Provide helpful customer service
- Have high ratings from previous clients, the BBB or their local Chamber of Commerce
- Be familiar with state laws
- Be transparent with your contract
- Have a low denial rate
- Recommend you speak with your attorney and accountant before making a decision
The choice to sell your annuity or structured settlement can be very personal and you should never feel rushed or taken advantage of. While it is a competitive market, at the end of the day, it is your financial well-being at stake, so the decision is important.
If the process becomes too overwhelming, hiring a broker may help. Similar to that of a realtor, an annuity broker will help find the best price and buyers, as well as explain and complete the necessary paperwork. It is important to feel comfortable with your broker so make sure you understand their brokerage fee as well as confirm they are certified and licensed.
The Key to Finding the Best Quote
How much you get for your annuity or structured settlement is the main factor in determining a buyer. Your sale is subject to a discount rate, so it is important to decide how much you are willing to discount your total annuity in order to get cash now. Most companies and private investors provide quotes for free over the phone. These can be a handy tool in determining who to move forward with. Buyers rely on a number of factors in order to determine what quote they will provide. These include:
- Current market rates
- How much money is in your annuity
- The number of payments you wish you sell
- When your payments are due
- The Insurance company that issued your annuity
- Extra fees or charges incurred by the insurance company that would likely transfer to the buyer
The Steps to Getting a Quote
Similar to if you were getting a loan from a bank, the process for getting a quote from a buyer is very similar.
- As a seller, you would initially provide the factoring company or investor with your annuity information which is often done over the phone or via online form.
- You then let them know how much of your annuity or how many payments you are interested in selling as well as your timeframe.
- You will then receive an offer based on the financial data attached to your annuity or structured settlement contract, as well as current market rates.
- Depending on the buyer, cash up front may also be offered
Interviewing Your Buyer
Don’t be afraid to interview potential buyers. Selling your annuity or structured settlement can be a very personal, important financial decision so it is imperative to find the right company to purchase your settlement. Here are a few questions that will help set the pace for the conversation:
- How long have you been in the business?
- What are your certifications and licenses?
- Does my free quote have an expiration date?
- How much do you offer in cash advances?
- What are your fees?
- How long does this process usually take?
- Do you have attorneys on hand to take care of the selling process?
Make sure to get independent legal advice before you finalize your decision to sell. There are specialty lawyers who know all of the ins and outs of the annuity game who can lead you in the right direction. If you have any questions regarding the buying process, general info, or to be paired with perspective buyers, our team is here to help! Contact us today, or find out more information by clicking here.