Confusion Regarding Valuation of Life Contingent Structured Settlement Payments- A Guide to Selling
Shopping around your life contingent structured settlement payments may prove to be more of an undertaking then you initially thought. We find that this is often the case for individuals who have worked with the same company more than one time and are either told by that buyer that they cannot help them get cash for life contingent payments OR have realized that approaching more than one annuity buyer may provide to be beneficial.
When working on getting a quote for life contingent structured settlement payments, there are important factors to keep in mind. The most important factor may be your health. Because life contingent payments (as the name suggests) are contingent upon you being alive, your age and health become major factors in assessing and determining what a buyer might be willing to pay you. It is important to understand that a company that pays you cash for life contingent structured settlement payments will only get those monthly (or in rare cases lump sum) payments if you are alive when they become due and owing. As a consequence, assessing the likelihood of this factors into the valuation.
With this in mind, you should consider exactly what your goals are and how much you are looking to raise before you speak to a life contingent structured settlement buyer. Many times, when dealing with life contingent payments, there is a diminishing value for year (by way of example) that you elect to convert for a lump sum. You may be wondering what that means. We all know that further out payments of the same face value are worth less than those payments due sooner. In other words, the $1,000 a month due in 2029 from Metlife is generally worth less to a structured settlement buyer than $1,000 a month due in 2039.
The issue of payments being deferred longer are less valuable that more immediately due payments is frequently compounded when you are talking about life contingent payments. For example, a $2,500 per month guaranteed payment in 2029 is worth less than a $2,500 per month guaranteed payment in 2035, the difference in value of these two payments MAY be more dramatic if they are of the life contingent nature. While this is not always the case, it frequently is. The most obvious reason (and the older you are the more dramatic the impact) is that with passing time mortality risk increases on some level.
Even though there is “no rule” of thumb in this regard, you may want to get multiple quotes for life contingent payments of varying periods of times. This will allow you to figure out which transaction makes the most sense for you. Ultimately, getting quotes from multiple life contingent annuity structured settlement buyers is always a good idea anyway.