Learn why purchasing a structured settlement may be a good financial investment.
The purchaser of a structured settlement payment plan is an investor that uses the opportunity as a lucrative deal for making profits. The traditional chain of the sale starts when a seller is willing to offer their annuity or structured settlement at a favorable price. Every party involved has the same objective to increase the return of profit on their assets, which will help in the willingness of both the seller and the buyer to make the deal. Many times, the recipients who own the structured settlement are eager to obtain as much cash and benefits as quickly as possible. However, to obtain a quick sale it must also be to the great benefit of the buyer.
Satisfying All of the Parties
Before the seller can feel confident in receiving his or her compensation, they need to understand the historical financial stability of the company or individual that will be providing the lump sum of cash. Likewise, the buyer wants to understand that the history of the annuity or structured settlement plan has been well seasoned, with a history of timely payments being made for months, or years. Only when both parties are satisfied will they be ready to proceed with the conversion of the settlement into cash.
Competitive Purchasing Price and Returns
Large companies that specialize in purchasing annuities and structured settlement plans are usually in the business to generate profits for themselves and their investors. Through the process of purchasing well-seasoned annuities and structured settlement plans, they can ensure that their investors will be greatly benefited by the profits that are generated. Likewise, they can ensure to the seller that a lump sum will be at a competitive price and handled professionally to the court system.
Reasons for Selling
Usually, the buyer wants to know the reasons that the seller is interested in converting their settlement or annuity into cash. Additionally, the court system will have to know this information too. Only if the seller has passed the predetermined threshold set by the courts, will the judge approve the transfer.
Other reasons the seller is interested in converting their annuity to cash is to pay off medical debts, purchase a new car, pay off a mortgage, invest in a college education or a host of other reasons.
Reasons for Buying
As the overall interest rates across the country continue to remain low, many older investors now struggle to find the yields they need to generate the payments they require. As a way to guarantee high yields, many individuals are turning to annuities and structural settlement investing to gain the higher returns on instruments that have low risk. The appealing returns received every month offer greater profits without involving traditional risk. Additionally, the purchase of a structured settlement annuity that has a great payment history offers an almost sure high yield return on the deal.
Why the Rate of Returns Are High
Unlike other investments in the industry, the rate of returns are high on the purchase of structured settlements and annuities because they are backed by high rated insurance companies that are paying off the annuity or settlement. Typically, these companies are not anticipated to have any type of risk. What makes the investment stronger is that the entire process of paying the annuity or settlement through the court system is that it was originally approved by a judge. The payments are typically guaranteed and have been scheduled to fix dates. These kinds of structured settlements are not typically “life contingent”, meaning the original amount will be settled until it is fully paid off.
For any financial planner interested in gaining a high rate of return, structured settlement payments are extremely appealing, especially in today’s economic marketplace.
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