A structured settlement is used as a financial instrument to provide owed compensation to the plaintiff that has won an injury lawsuit. They are often the victim of automobile accidents, medical malpractice or other types of incidents. Structured settlements are used as compensation for the individual to cover suffering, pain, the costs of medical care, and lost wages.
Because the plaintiff’s ongoing expenses are often required for long-term living, the compensation is provided in periodic, routine payments that can be made monthly, quarterly or annually. This ensures that the plaintiff in the case will receive money as needed over the course of their life. There are numerous agencies that are available that offer the defendants a way to purchase the annuity policy for a reduced amount. In these cases, it will be the insurance policy that makes monthly payments, not the defendant.
Buying the Structured Settlement
There are numerous reputable companies that purchase structured settlement annuities from the plaintiffs in the case. As long as the plaintiff is the beneficiary of the policy, and there are still remaining monthly payments to be made, the annuity policy has a worth on the open market. These reputable companies purchase the legal right to obtain all remaining payments in exchange for a lump sum made to the beneficiary.
The Process of Transferring Rights
The entire process of transferring the rights of the remaining monthly payments from the plaintiff to the purchasing company takes place over the course of about three months. The initial steps by the plaintiff require obtaining two or three qualified structured settlement quotes from different companies and analyzing each one. Each bid will detail exactly how much the structured settlement purchasing company will pay for the remaining value of the policy, along with all of the incurred expenses.
The determination of its value is calculated on exactly how much the policy is worth today, based on the future impact of inflation, along with the cost of money and the expenses associated with the transaction. It is important to understand that the purchasing company provides the lump sum of cash in exchange for making a profit. The amount that will be offered by these reputable companies will only be a percentage of the total amount of its worth from now until the last payment.
Additionally, the purchasing company will consider the strength and stability of the insurance or Annuity Company that is providing the monthly payments. The above factors will help determine the actual risk involved in making the investment, in exchange for providing the plaintiff with a lump sum of cash.
The process requires extensive paperwork and a visit to the judge. In most states, it will be up to the court to decide if the plaintiff’s needs be met by obtaining a lump sum, over the benefits of receiving a monthly payment. In the end, it is quite simple to sell or transfer the rights of all the remaining payments to receive a large sum of cash that can be spent on anything the plaintiff wants.
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