People who get large insurance claims after an accident often receive structured settlements. A structured settlement is a payment that is made either annually or semi-annually to an individual. These settlements are usually structured to help the person deal with ongoing medical expenses that may occur. People who own settlements can choose to sell it if they wish. In order to purchase a structured settlement, the company who issued the settlement must allow them to be sold.
Purchase Settlement Annuities For Their Tax Advantages
Many companies that sell these types of annuities tout the advantages of tax avoidance.
While you should not base your decision to buy structured settlements solely on tax consequences, it is certainly a consideration. Specifically, personal injury payments are exempt from federal income tax under federal law. However, settlements for lost wages are subject to taxation. When you settle your claim, you may avail yourself of other tax advantages under the Federal Structured Settlement Protection Act.
With appropriate tax planning, such a settlement may provide favorable tax treatment, and may in some cases be tax exempt.
People who are looking to cash in on their structured settlement are seeking a lump sum payment. This lump sum payment is in exchange for the ongoing structured payments that the party is receiving. These settlements are popular to buy because they are guaranteed income at the certain interest rate. The only risk in having a settlement is the risk that the company issuing the settlement declares bankruptcy.
When people are selling their settlements, they do not receive the full value of the actual settlement. They get immediate cash, but aren’t paid the full value of the settlement. This means that the buyer of the settlement does gain some return on their investment.
There are many reasons why someone would want to sell their structured settlement. The biggest reason would probably be a need for instant money. Many people go through times in their lives where they need some immediate cash. Because structured payments are set up annually, many people choose to encash their settlement for an instant payout. The person purchasing structured settlement pays out a lump sum for the holder. They receive the benefit of having a secured investment for the remaining period.
Purchasing Structured Settlements is a good way to get a guaranteed income. Do a search online and you can find the Best Settlement that is available.