When considering a structured settlement, it is equally as important to consider the potential downsides as well as the potential benefits.
These potential downsides include:
The inability to change your structured settlement‘s terms after agreeing on the details and having it finalized in court. If a change in the economy or your circumstances leads to a change in your financial situation, you may only have the option to sell your structured settlement. However, as we saw earlier, selling your structured settlement will likely mean you miss out on between 10% and 20% of its total value.
If you face a financial emergency, you can’t quickly get funds if you have a structured settlement. If you want to sell your structured settlement, a judge will generally sign this off within 45 to 60 days of an application. However, before that, you must find a buyer, consult with financial advisors and lawyers, and take care of the entire process. Therefore, it could take significantly longer to get the cash you need.
The regulatory framework prevents you from selling your structured settlement or taking a lump-sum paid out as part of a structured settlement and then investing the cash in another investment offering a higher rate of return.
You may be liable for surrender charges and tax penalties depending on when you sell your structured settlement or if you withdraw funds before a certain age.
While regulations around structured settlements are generally robust, they are inconsistent across the United States. Because of this, insurance companies in some states are not legally obliged to disclose their costs. This may lead to you losing significant sums in admin fees maintaining your annuity. Take the time to ensure you know just how much you are paying in fees. That’s cash off your settlement, after all!
If your structured settlement is no longer working for you, get in touch now for a free, no-obligation quote to sell your structured settlement!