Friday 17 December 2010

Selling a structured settlement is not a good investment

A structured settlement is a financial or insurance arrangement, defined by Internal Revenue Code as periodic payments; a claimant accepts to resolve a personal injury tort claim or to compromise a statutory periodic payment obligation. Structured settlements were first utilized in Canada after settlement for children affected by Thalidomide. Structured settlement cases became more popular in the United States during the 1970s as an alternative to lump sum settlements. The increased popularity was also due to several rulings by the IRS and an increase in personal injury awards. The IRS rulings changed policies such that if the requirements were met then claimants could have federal income tax waived.

Is selling a structured settlement a good investment ?

Before one decides to sell his structured settlement for another investment opportunity; it is worthwhile to consider the pros and cons of such an action. The most important advantages of structured settlements include regular payments that are free from income tax and are secured by state and federal laws. This cannot be said of many other investment options. Structured settlements can also be invested in government schemes that may offer low returns but are guaranteed.

The main reason for an individual opting for another investment vehicle is the apparent high returns from that investment option. These options include stocks and real estate. One should compare the pre-tax income from an alternative investment source to that from a structured settlement. Also, the process of selling a structured settlement involves a cost. This is because the amount of settlement payment sold is more than the lump sum obtained. This cost should be factored and compared to the returns from another investment.

Choosing a structured settlement investment as an option for for financial gain can be a viable method of acquiring profit.


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1 comments: on "Selling a structured settlement is not a good investment"

Unknown said...

Once you receive the green light from legal authorities, you can negotiate your sale with a variety of structured settlement buyers in the market. Looking for Buyer for Structured Settlements There are a number of professional company engaged in the business of purchasing structured settlements. Buyers buy out settlement for all discounted cash prices.structured settlements

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