Structured Settlement Annuity – start here if you want to understand
When we have the enviable situation of a choice of how money comes into our lives, in terms of lump sum, or regular smaller payments, that situation calls for some real knowledgeable advice!
Things happen, such as accidents, medical malpractice, or other occurrences that might lead to a large payment out to you – imagine winning the lottery – rare, yet it happens every week!
So in this situation, you will often encounter the scenario that whom ever has the responsibility to pay you will often opt to do so by paying smaller, regular amounts rather than a huge lump sum.
You can understand that this make slife easier for them – smaller payments to you, plus the hope theu will have that you die early and end their financial responsibility! This is achieved by a legal agreement called a Structured Settlement. This is often paid in a way that is useful to the responsible party, what they can do is purchase an annuity – a yearly payment, through an insurance company. This is why it’s called a Structured Settlement Annuity.
So, the structured settlement annuity is beneficial to the company that owes you the money, and you may well be happy with that agreement, depending maybe on the amount payable to you.
But what if you are not so happy with the annual settlement payment? what if you actually want the whole shebang, right now? Have the whole amount transferred into your bank account so you have the freedom to handle it the way you want. This may well be the preferred option for certain individuals, but history has shown that unless the recipient is very, very careful, with a plan in place, the recipient is likely to be very careless with how the money is spent. When you have many thousands of dollars available to you immediately, just sitting in your bank account, you may not think twice about spending a few thousands of dollars casually or recklessly.
In that situation, you may well end up wishing for the days of the structured settlement annuity safety net!
This unfortunately is what often happens to the “average person” – we all have heard stories of lottery winners not doing well financially just a few months or very few years after claiming their winnings(and that is putting it politely!).
And remember that money attracts attention – often unwelcome attention.
When you are known to have access to superior finances, you will often find yourself receiving offers of friendship and being asked to give “loans” just to “help out” somebody-or-two.
You should also expect to be badgered into “investing into business ventures”. All such activity is to be shied away from! get a solicitor and direct everyone who wants your money to the solicitor!
Of course, you could be savvy enough to get professional financial(and legal!) advice. Never forget the legal part – there are lot’s of people out there who are incentivised by their own payments over their responsibility to you. It’s wise to be careful.
An example of such products is mutual
funds(which come with fees!), which can be high-paying, but also
poor-paying! The mutual fund depends on factors outside your control,
like the economy in general, or the performance of equities(company
shares) and the wisdom of the fund managers… So, there are many disadvantages of
forgoing the structured settlement annuity route, like a walk on
thin ice! You really need to decide on who you are as a person – what kind of risk-taker are you?