Structured Settlements As Lump Sums

Written by Jacey Harmon
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When a person is trying to settle an insurance claim, they are often offered two payment types, a lump sum or structured settlement. The lump sum is very straightforward; it is a lump sum of cash in exchange for releasing the insurance company of any liability. Structured settlements are paid over time instead of at once and release the insurance company of any liability. Once a structured settlement is accepted, it is basically bound in stone and can not be undone.

If, for whatever reason, a person changes their mind about the structured settlement, there is one option to consider: selling the settlement. Actually the term "selling" is a bit of a misnomer as a beneficiary does not own the settlement. Instead, the beneficiary owns the rights to the payments and can "sell" or assign the payments to anybody he wants. This can be done in part, as in only part of the entire settlement or part of a single payment, or it can be done with the entire payment stream.

Getting a Lump Sum for Your Future Payments

There are a couple of reasons why a person may want to consider selling the entire payment stream. A person may simply be tired of waiting to collect the periodic payments and may just want to get it over with. You may want to start a business that requires a substantial initial investment and instead of taking a loan, you can sell your settlement.

Whatever your reason for selling out, there are some things that should be made clear before you complete the transaction. As with every other business, the businesses that buy settlement payments intend to make a profit. They make their profit by paying a lower amount up front than what the future payments total. By selling your payments for a lump sum, you are agreeing to receive a smaller amount of cash today in place of the future payments. Assigning payments may require court orders in some states; your lawyer or the purchasing company will be able to let you know if one is needed.

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