Structured settlements investments is a way of income earned over some unfortunate circumstances which is a steady flow of income in truth. And it is beneficial to invest in structured settlements as well. A Structured settlement arises mostly when the claimant of the plaintiff wins a lawsuit as for example an “injury caused due to medical malpractice” and the compensation to this injury is awarded by the means of series of payments over a fixed period of time.
Each of these forms of insurances follows a definite structure and may vary from person to person depending hugely on the age group. For instance if a child faces injury ,the payments are offered after the child turns 21 and on the other hand an injured 45 year old is scheduled to receive regular payments for the next 20 years and finally a lump sum amount at the of 65 as well. The uniqueness of different situations makes it tough to track a pattern in each case for a generalized view.
Structured Settlements Investments
Most often people decide about to take steps to avoid any kind of financial risks in structured settlements annuities, such as the plaintiff having to wait on the defendant to receive payments over the span of many years in structured settlements investments. This is when the defendant opts for purchasing an annuity from a good insurance company to carry out the payments he is obliged to. This allows the defendant to resolve and end his/her settlement with investing a single lump sum amount at once.
Invest In Structured Settlements
This is where investing in a structured settlement comes in to play. Investing opportunity comes in handy when the plaintiff at the receiving end of the structured settlements for sale finds himself a need or want for more liquidity in the procedure. The individual then decides to contact the company to explore selling the structured settlement income stream.
In reality most companies that buy structured settlements do not enlist them in their self investment portfolio and they further sell structured settlement to an investor cutting themselves a deal of a small slice or commission and carry on with the process of buying and reselling with their cases as well.
The unique way of working of a structured settlement makes them a stand out option for investing in structured settlements and investing the money in. When you to invest in structured settlements, it offers higher yields but not at higher risks unlike other deals that offer returns “too good to be true” with the risks that are also “too good to be true”.
Beyond Structured Settlements
Let’s look beyond structured settlements. There are also disadvantages pertaining to the investing in structured settlements and some of the points make them not a very good option to invest in.
Firstly the maturity period of the settlement is really long (20 years) and also this product is considered to be illiquid. The liquidity of structured settlement is not as robust as it is in the bond market. There are also trust issues in investing in structured settlements, related to receiving the payment for a long period of 20 years.
Relying on cash from a single insurance company for a period of 20 years seems like a huge risk to take as things are really dynamic in the recent times. And lastly on comparison of structured settlement companies with a corporate bond index, it surely gives results much less appealing over all.
Before one decides to invest in structured settlements, it is very much advisable to look after the benefits and set backs of the total procedure and being patient in reaching the final decision.