by John Darer
If you're receiving lifetime annuity payments or life contingent structured settlement payments, are you better off selling the structured settlement payment rights, or doing nothing and keep on receiving the guaranteed payments for life.
"In a lot of cases our clients are receiving payments that are called Life Contingent. The problem here is you don't know where you will be in 5 years and if you die than the payment goes away. Selling off your payments in exchange for a lump sum is a much smarter idea".
Many structured settlement payees receive their payments via direct deposit to their bank accounts. so if you " don't know where you are going to be in 5 years" at least you can rest easy by knowing where the payments will be going. You will need to let the annuity company know your new address and if you change your bank account you should obviously let thme know that information as well. The procedure is very easy.
When you sell lifetime structured settlement payment rights you are trading money that you know you are going to receive if you live even beyond the age that the mortality tables say you are going to live. That could mean to age 75, 80, 90, 100 , or more.
An assisted living facility in my area counts a perky 103 year old among its residents.Selling life contingent structured settlement payments comes with a higher cost because the purchaser will want to purchase life insurance on your life. Think about this, if you were going to be turning over a bunch of cash (to someone whose mortality may already impaired due to an injury) in exchange for payments to be received years into the future only if the seller is living, the life insurane would make sense, wouldn't it?
If having a stranger owning a policy on your life doesn't creep you out, the purchaser will also factor in the added risk of a potential contest with your heirs.
While the companies that buy structured settlement payment rights from sellers may make a point of saying they buy life contingent structured settlement payment rights, one of our sources tells us that unless it's a big deal the transaction makes little sense for the buyer. Another source tells us that the average transaction is in the $45,000 range and concurs that only the big deals make sense. So why confuse the masses with all the narishkeit?
If you have a structured settlement that includes lifetime payments and questions come up because your circumstances have changed or simply because you have seen an enticing ad or blog about selling your life contingent structured settlement payments, stop, take a deep breath and contact a verified credentialed financial professional (e.g. CSSC, RSP, CFP, CLU, ChFC, CPA). Recognize that some material is generated by writers with little relevant financial education, some of whom may even be falsifying credentials.